Wikipedia has a better explanation than I can come up with.
Quote:
Homecoming is an annual tradition observed by many American towns, high schools and colleges, usually in late September or October. Its purpose is to welcome back former residents and alumni, and is built around a central event, such as a banquet or football game.
When celebrated by schools, the activities vary widely. However, they usually consist of a football game played on the school's home football field, activities for students and alumni, a parade featuring the school's marching band, and the coronation of a Homecoming Queen (and at many schools, a Homecoming King).
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The homecoming queen is sometimes chosen by other students in an election, sometimes the queen is selected by some sort of student counsel. It's usually a popular and pretty girl.