Vamana, the dwarf, is the fifth incarnation of Lord Vishnu. He is also the first incarnation of the Second Age or Treta Yuga. The Bhagawat Purana describes that Lord Vishnu descended as the Vamana avatar to restore the power of Lord Indra over the heavens, which was taken by King Bali. The story of Lord Indra and King Bali is narrated below.
Bali conquered the gods through great religious practice and asceticism. He drove out Lord Indra, the king Gods. Indra went to Lord Vishnu for help in conquering Bali and taking back his place with Gods in heaven. Lord Vishnu obliged him and took birth as a Brahmin. He went to King Bali’s sacrifice ceremony. The king honored the Brahmin and invited him to receive anything from him. Shukra, Bali’s guru recognized the Brahmin’s true self as Lord Vishnu. He warned the king, but in vain.
The Brahmin, Vamana then requested Bali to grant him as much land as his legs could cover in three steps. The king did as he vowed but to his dismay, as when Vamana took his first two steps, he encompassed the earth, the middle world, and the heavens--and returned them to Lord Indra. To complete his promise, Bali offered his own head to Vamana for his final step. Vamana taught King Bali that pride and wealth is transitory and can easily disappear. Some believe that Lord Bali is supposed to return every year on the earth. Hence, Onam festival is celebrated in welcoming Bali home to his lost kingdom.