Why did Hiranyakashyap make Prahlad sit on Holika's lap and burn, I know after that Prahlad survives the fire since he chants Lord Vishnu.
Thus Holi is celebrated as Good over Evil.
There are different stories for this event. What I have heard is as follows (the story I have heard is similar to @Pravin):
Prahalad was a great devotee of Lord Vishnu and son of Hiranyakashyap. Hiranyakashyap was a danav and treated Lord Vishnu as enemy. He never liked Prahalad worshiping lord Vishnu and used to punish him for it but Prahalad never listened to his father. Gradually Hiranyakashyap started hating Prahalad for loving his enemy (Lord Vishnu) and all his punishment was in vein because Lord Vishnu would always save Prahalad from any difficult situation. Hiranyakashyap couldn't bear this anymore and he decided death sentence as a punishment for his son, now Hiranyakashyap tried everything in his power to kill Prahlad like throwing Prahalad from top of the mountain, used weapon to kill him, etc, but nothing worked (again lord Vishnu would save him every time), so he decided to seek his sister's help. Now Holika comes into picture, she has a boon that she will not burn until she is wearing chunni given by Agni Dev (Boon - whoever wears that chunni shall not burn). So She took Prahalad with her and sat on fire. The plan was to burn Prahalad since Holika had chunni that will protect her from burning, but instead the wind blow and chunni flew from Holika's head and covered Prahalad.