(The paper-crafted statue of) "the king of ghosts" will be burnt. This symbolizes the removal of the impurity brought by wandering ghosts and their disturbance to the community.
Examples (Wiktionary)
Mandarin
神明吗?那是很可敬的。但是不要农民会,只要关圣帝君、观音大士,能够打倒土豪劣绅吗?
神明嗎?那是很可敬的。但是不要農民會,只要關聖帝君、觀音大士,能夠打倒土豪劣紳嗎?
shén míng ma ? nà shì hěn kě jìng de . dàn shì bù yào nóng mín huì , zhǐ yào guān shèng dì jūn , guān yīn dà shì , néng gòu dǎ dǎo tǔ háo liè shēn ma ?
The gods? Worship them by all means. But if you had only Lord Guan and the Goddess of Mercy and no peasant association, could you have overthrown the local tyrants and evil gentry?