Bungie quietly rolled out a special Halloween themed update for Destiny today. The update includes new cosmetic gear that takes the form of special character and enemy themed masks. Bungie even set up a special help article to explain what the "Festival of the Lost" event is all about.
Q: What is Festival of the Lost?
A: Festival of the Lost is a live event that is available to all Destiny: The Taken King players for a limited time. This event includes new Quests, Consumable items, themed Gear and new Eververse Trading Co. items. Festival-themed activities and most non-Legendary quality items will no longer be available once the event is over.

Q: When is Festival of the Lost available?
A: Festival of the Lost will be available during the following times:
Begins: October 26, 2015
Ends: November 9, 2015

Some of the content is not limited to those with The Taken King content, but some of the events are limited to those with the expansion.

Now, people seem a bit confused about how to obtain the content. Players can purchase packages using Silver that grant them a chance to get some of the special masks. However, you can earn all of the masks simply by playing the game. To begin things, talk to Eva Levante in the Tower. She'll have you collect candy from the various Tower citizens. Take your full candy sack back to Eva and she will give you some special items along with additional quests.

You can also earn additional candy for kills against enemies. Take your sacks back to Eva to get a new mask or crafting materials. You can earn masks of various quality levels. Blue level masks expire at the end of the event while legendary are yours to keep. You can turn blue into legendary levels by using glue, also randomly dropped each time you turn in a full sack.

On top of this, the Eververse Trading Co. is selling three new dance emotes. These include the "Boo", the "Monster Dance", and a "Zombie Dance" that is actually the dance from Thriller. Boo is 300 Silver, Monster Dance is 500 Silver, and Zombie Dance is 700 Silver. To be fair, the Zombie Dance is very long and quite elaborate, hence the higher cost. These are all cosmetic and all optional. The Silver, for those who don't remember, is the in-game currency that can only be obtained by using real world currency.

This post on the Destiny subreddit gives a very clear explanation of the items and gear you can obtain. This other post shows off each of the masks that you can earn.