It’s a pretty good bet that Cinco de Mayo is celebrated more in the United States than in Mexico, where it's celebrated primarily in the Puebla district, which is just south of Mexico City.  What they’re celebrating is the Mexican militia whoopin’ the tar out of the French Army, a bit like how Davey whooped Goliath, in The Battle of Puebla in 1862.  Of course, the Mexican militia was later defeated, but that doesn’t mean they still can’t celebrate.  (The History of Cinco de Mayo)

The common misconception of non-Mexicans is that what everybody is celebrating on the 5^th of May is the Mexican Independence Day.  That would be September 16, 1810, which is when Miguel Hidalgo y Costilla, a revolutionary priest, called on his parishioners to take arms against Spanish oppression, which was basically a declaration of their war of independence against Spain.  (2 Cinco de Mayo)

Cinco de Mayo finds its roots in another war, the Mexican-American war, which lasted from 1846 to 1848, and ended badly for Mexico.  That war, combined with a civil war, left Mexico not only devastated, but bankrupt.  So on the 17^th of July, 1861, President Benito Juarez announced to all of his foreign debtors that Mexico was going to take a two year hiatus from repaying their foreign debts, after which they would start up where they left off.  I mean, what were they going to do?  Repossess Mexico?  Well... yes.  But not all of the debtors.  Just the British, Spanish, and the French.  The British and the Spanish eventually learned a lesson about blood and a turnip and went home.  But France stayed on.  It is argued that they were trying to “...create an Empire in Mexico under Napoleon III.”  However, others believe that it was a move by France to limit America’s power.  “Napoleon III believed that if the United States was allowed to prosper indiscriminately, it would eventually become a power in and of itself.”  So even though the French campaign eventually failed, France still won the rights to the phrase, “I told you so.”  Meanwhile, though, Mexico had drawn a line in the in the loose, rocky soil at Puebla, behind which stood “5,000 ill-equipped Mestizo and Zapotec Indians,” all led by General Ignacio Zaragoza.  And they held their ground in what came to be know as “Batalla de Puebla” to the Mexicans, and “Tempête de Merde” to the French.  The French Army was defeated on the 5^th of May, 1862, and it’s been a good reason to celebrate ever since.  (1 Cinco de Mayo.)

Aside from still being celebrated in Puebla and a few other parts of Mexico, it is mostly celebrated – and marketed – in America, especially in cities that have a high Mexican population, but generally anywhere that needs a reason to drink.  (The History of Cinco de Mayo)