The narrative is the odd part. Mahabali, an asura king, rules so well that his subjects want for nothing and there is neither poverty nor deceit in his kingdom. Vishnu comes to him as Vamana, a dwarf brahmin, and asks for as much ground as he can cover in three strides. Granted it, he grows, covers earth with one stride and sky with the second, and asks where to put the third. Mahabali offers his own head. He is pressed down into the underworld, and permitted one day a year to return and see his people.
In most tellings elsewhere this is a story about divine cunning overcoming the pride of an asura. In Kerala it is a story about a good king who was cheated, and the festival is his welcome. The songs are about how things were under him. The emotional weight sits with the one who lost.
Why it is contested
That framing makes Onam awkward for a religious politics organised around Vishnu's avatars. Attempts have been made periodically by Hindu nationalist organisations to recast the festival as Vamana Jayanti, marking the avatar rather than the king, on the grounds that the Thiruvonam asterism is associated with Vamana's birth. Kerala has resisted this loudly, and the objection is not only theological. Onam is kept in Kerala by Hindus, Christians and Muslims alike, is the state's official festival, and is one of the few things in Kerala public life not organised by community. Recentring it on the deity would make it a Hindu festival in a place that has deliberately kept it from being one.
Both framings are in circulation and the argument recurs annually in the Malayalam press. This entry describes the festival as Kerala keeps it, which is the version with Mahabali at the centre.