I found this article which explains ghost month in a pretty entertaining way..
Eastern religions are a little more sanguine and pragamatic about the whole deal (and, on the whole, also don't make films with either Demi Moore or Patrick Swayze). Rather than banishing the spirits they try to appease them by inviting them temporarily into the world of the living. Nowhere is this more apparent than in Taiwan during Ghost Month. On the first day of the seventh lunar month, 'Open Day' in hell is held, the gates to the underworld are opened and the spirits are allowed to cross over into the living world.
Not only do the Taiwanese accept these hauntings with admirable equanimity, they actually give their ethereal guests the full VIP 5-star treatment. At the Chung Yuan Festival (about halfway through the month), huge banquet tables are set out in temple courtyards and mountains of fish, vegetables, meat and other delicacies are offered as sacrifice; hanging lanterns are erected to guide the ghosts to the table; non-stop operas entertain during dinner and fake money is burnt so that guests have a bit of pocket-money to spend when they return to hell.
This hospitality is not entirely altruistic - it's insurance against paranormal acts of retribution. Other do's and dont's to be observed during ghost month include the following: weddings, special plans, business deals and outings should be put on hold till the end of the month; no whistling, whistling is not a good idea, whistling will lead the ghost straight to your home; talking ill of the dead (even if it's true) will just bring tears and heartache; special care should be taken when walking along riverbanks where a water ghost can easily steal a living spirit; and adding to the numbers by burying the dead is, unfortunately, not a good idea. On the 30th day of the month, the gates of hell are closed again and the ghosts return to the other side.
I was told that during ghost month, you're not supposed to hang your laundry out to dry, swim, or whistle at night. The first day of the month, almost every store owner had set up a card table in front of their business with lots of food on it with incense stuck in the food. The second and third day, they burnt paper money in these big silver pots. Nothing has really happened since the 3rd. I was told that in the middle and end of the month, the tables of food come back out.