Why Did Mahabali offer his Head?. If we think logically, we cannot give any offering to God, because all our offerings are God's own creation. It is like our friend coming to our house and giving rose flowers which was actually plucked from our own garden and saying that it is his token of love.  Same way anything we around is God's creation including own own body. Then what is that we can offer to God that which is not created by God?.

"Ego" is what God did not create  but created by us. When Mahabali understood this Truth, he offered the Ego which he self created and symbolically showed by showing his head. God placed his compassionate feet on the head and pushed the Ego to the Paathal, the area of mental attachments.  When we give up this Ego mental attachments, then we get the grace of the Lord's feet giving us everlasting happiness (Swaraga or  Heaven), which is what Mahabali witnesses as Onam.

Giving up our Ego is the greatest sacrifice (Bali) any human can perform. This is why  he is called Maha Bali, the one who performed the great Bali or sacrifice. We are always caught up in the Ego of jealousy, hatred, judgments, lust, greed etc and never have a peaceful life in spite of all material wealth. Lord does not want us to surrender any of our material wealth, achievements and accomplishments, but only our Ego. Once we do that "Bali" or sacrifice, then Bhagavan blesses us like Maha-bali a life of witnessing Onam always.

Surrendering Ego we will always have a life of happiness. We will treat everyone as one and the same. Then there will be no need for cheating and deploy.  This is the meaning of the song, Maveli Naadu vanidum Kaalam, Manusharellam onnu Polae". This means when we give us Ego in life, we treat all human beings as one Vasu deva kudumbam. Then there is no need for kallavum and Chathiyum (dishonesty and Cheating) So Mahabali was not sent to Paathal or lower kingdom but only his Ego. Mahabali now enjoys  Swarga (Heaven).

               
Onam is also the Tiru-Nakshatram of Lord , which means that we get the status of Lord Himself, once we surrender our Ego to him. This is why Mahabali is welcomed as Tiru-kakkarayappan on Onam days. This is the deep significance of celebrating Onam. If we understand this great event and story of Mahabali we will have Nithya Onam in our hearts.