The Ghost is one out of the 3 Lower Realms (Animals, Ghosts, Hell), while the 3 Higher Realms consist of Ashuras (jealous gods, demi-gods), Humans, Devas (heavenly beings)
The Ghost have many types. Just like an Animal have many types... many species. There are tens, or hundreds, of different types of ghosts, but here I'll only speak of the most commonly focused 2 types.
The most common one is called "Hungry Ghost". The "Hungry Ghost festival" have some links with this type of ghosts... But then, there is a great common misconception. Firstly, 7th month is NOT a festival! How can the sufferings of ghosts be celebrated? It is a folly of chinese tradition. The 7th month originated from Buddhism 2,500 years ago, it's about the liberation of petas (ghosts), the practice of merits in order to save these pitiful beings.
Please read this article for full details on the origins of the Ullabana:
http://www.jenchen.org.sg/vol5no1a.htmIn Singapore, many people think that the Hell gates will open at the 7th Month. This is untrue! Some people deviate the original Buddha's teachings and mislead people. Or, they will burn hell notes for these deceased and think that they will gain all the material wealths.
Actually, you cannot bring material wealth to the ghosts in this manner, neither do the ghosts need money to live in the ghost realm. Have Buddha advised anyone to burn paper money for the ghosts?
The other type of ghosts is the "Ghost-Gods", called "Gui-Shen" in Chinese. This type of gods or spirits are commonly worshipped or asked for divination and answers. Or, sometimes in temples, they summon the spirit-gods to possess the person and dance

. I've yet to see one of those shows, my friend went and told me it's really horrible because the ghost cut up the body it possesed... I'm sure not all of them are like that, but anyway, I don't think I'll go and see one

Buddhism does not teach us to be superstitious about ghosts. We are advised not create yuan with these type of beings.
The ghosts are very attached beings, this is one of the cause that led them to become a ghost.
Those "chosen" people were possessed by some other spirits who claimed that they were the Tua ya bei, Ji gong and so on, all these spirits were those human beings who were very superstitious when they were alive and like going to all these superstitious places to learn these kind of teachings & practice them. However, they have good karma, and turn into "ghost-gods" and are worshipped by humans.
These spirits would get angry & develop hatred easily when their wishes were not fulfilled. They would punish those "chosen" people, making them sick or worsen their living. There are dark consequences to those who practice superstitiously... So I always advise people to stay away from superstitions that have to do with the ghosts, but instead, cultivate in accordance to the Buddhadharma, teaching of bliss & wisdom.