From the Super Mario Wiki
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The Star Festival in the Mushroom Kingdom celebrates a special comet that passes through the skies once every one hundred years and releases Star Bits. The Toads of the Mushroom Kingdom gather in the Castle Gardens outside Princess Peach's Castle to collect these Star Bits and combine them to form a powerful Grand Star, which is then brought to the castle. During this festival, Princess Peach stumbles upon Luma.
In the beginning of Super Mario Galaxy, Mario is invited by letter to the Star Festival by Princess Peach, who wants to give Luma as a special gift. Bowser then appears and attacks with a fleet of airships, eventually abducting Peach's Castle with Peach inside.
After Bowser is beaten and both Mario and Luigi have each collected all 120 Power Stars, the Grand Finale Galaxy is unlocked, where The Star Festival occurs again, due to the universe being recreated.
In Super Mario Galaxy 2, the Star Festival occurs again. Once again, it is interrupted by Bowser, who has used the Power Stars to become giant.
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