Gazing at the Moon is an ancient tradition from the Zhou Dynasty (around 500 BC) when people held ceremonies to welcome the full moon, with huge outdoor feasts of moon cakes, watermelons, apricots, apples, grapes and other fresh fruits. The popularity of this ancient tradition began to grow during the Tang and Song Dynasties when people of high rank held banquets in their big courtyards. They drank fine wine, watched the moon and listened to music. Common people who could not afforded as big parties as the rich would lay some food such as moon cakes and fruits on a table in the courtyard and pray to the moon for a good harvest. This underwent a great rise during the Song Dynasty, and historical documents tells about mid autumn festival night in the capital, where people would stream to the night markets and together with their families admire the beauty of the full moon. There are also many classic songs and well-known verses about this tradition.
Eating Moon Cake
Eating mooncake while watching the full moon is a central part of the festival moon cakes throughout China, and is a symbol of family unity. At the very beginning, the moon cakes were served as a sacrifice to the Moon. The words moon cake first appeared in the Southern Song Dynasty, even though, at that time, the moon cakes were not round. Nowadays, moon cakes are given as presents to loved ones and it represent people’s wishes to be together during the mid-autumn festival.
Apart from these two traditional customs, different regions have their own celebrations.
Source : http://www.chinatravel.com/facts/chinese-festivals/traditional-chinese-festival/Middle-Autumn-Festival.htm#1