Both the present and the Edo period share the same standard Tanabata events. However, there aren’t only celebrations that connect the two eras, but also things that got lost. Here are a few of them.
Writing wishes on strips of paper and decorating bamboo with them has survived to this day. The child doing his best to support the big bamboo is really cute. (Utagawa Kuniyoshi, ‘The Seventh Month’ from the series ‘Children’s Games of the Five Festivals’) 
The Tanabata Festival as an autumn Edo celebration
Nowadays, Tanabata (7th July) takes place right in the middle of the rainy season. According to Tokyo weather data, Tanabata has seen clear skies only once in the past ten years. Can Orihime and Hikoboshi even meet now…?
However, in the Edo period, the two had many more chances to meet at night, since according to the old lunisolar calendar, the 7th of July would have corresponded to 2016’s 9th of August. Basically, the calendar revision of the Meiji era drastically lowered the pair’s chances to meet.
Speaking of which, the months and seasons of the old calendar were grouped differently: spring lasted from the first to the third month, summer from the fourth to the sixth, autumn from the seventh to the ninth and winter from the tenth to the twelfth. That would mean the 7th of July would have taken place in autumn.*
So while for a contemporary person Tanabata is a summer festival, for an Edo citizen it would have been an autumn festival. Unexpected!
Two lovers, or simply a man and a woman decorating the leaves of a bamboo tree with strips of paper. (Suzuki Harunobu, ‘Decorating for the Tanabata Festival’) 
Tanabata has its roots in China, but evolved in a particular way in Japan
First of all, let us start with a surprisingly little known fact about Tanabata. Everyone knows about the romantic story between Orihime and Hikoboshi. Here is a short summary —
The masterpiece ‘The Moon of the Milky Way’ from ‘One Hundred Aspects of the Moon’ (Tsukioka Yoshitoshi) 
The legend of Orihime and Hikoboshi (summary)
Once upon a time, a brilliant weaver, Orihime, and a hardworking cowheard, Hikoboshi, lived on the opposite sides of the Milky Way. They soon got married and had a happy life as newlyweds, but before long they started neglecting their duties because their happy life as newlyweds went a little too well…
Seeing this, Tentei, Orihime’s father, got really angry, so he put the Milky Way between the two, forcing them to live apart again. This forced separation made Orihime and Hikoboshi shed rivers of tears.
Tentei couldn’t bear to see this, so he decided that if they worked hard enough, he would allow them to meet once a year; that would be the Tanabata night. The end.
Orihime and Hikoboshi are a married couple, not lovers.
Well now, this legend of Orihime and Hikoboshi we all enjoyed since childhood has its origins in China. By the way, in China Orihime is Zhinü, while Hikoboshi is Niulang, and they correspond to Vega of the Lyra constellation and to the star Altair of the Aquila constellation.**
So, in ancient China, based on the legend of Zhinü and Niulang, on the 7th of July girls prayed that their sewing improved, so that they would share their skill with the talented weaver Orihime/Zhinü.
In the Nara period, the legend of of Zhinü and Niulang, as well as the custom of praying for better skills, came from China through various envoys. These were combined with an event native to Japan, a purification ceremony that took place before the Obon festival named Tanabatatsume, thus arriving to what we know nowadays as Tanabata. It is believed the native festival is the origin of this name, although it seems it was originally read as Shichiseki.***
This custom (‘kikouden’) also took place at the imperial court of Japan: on the night of 6th of the seventh month, peaches, aubergines, abalone, needles of gold and silver and yarn of the five colours, as well as a koto and many others were left as offerings at a specially prepared altar, accompanied by prayers for better sewing skills. The nobles would watch the stars while burning incense, reading poetry and praying for the reunion of Orihime and Hikoboshi. How romantic~
A reproduction of the Tanabata festival as seen in ‘Genji Monogatari’ from the Costume Museum in Kyoto. 
Moreover, the poems were not written on paper on Tanabata night, but on the leaves of a sacred tree, paper mulberry.
The water used to make the ink came from the night dew collected on the leaves of taro, considered ‘drops of the Milky Way’. More and more romantic! Other wishes written on the rudder leaves, besides the poems, were offered to the starry sky. ****
Tanabata, a festival of the masses starting with the Edo era
Time has passed and we have entered the Edo era. The shogunate decides Tanabata is an important seasonal festive day (one of the main five seasonal festivals) and it becomes the subject of grand festivities.
(Okumura Masanobu, Tanabata festival) 
This painting belongs to an artist from the first half of the Edo period, Okumura Masanobu.
The legend of Orihime and Hikoboshi is illustrated in the upper part, while in the second half we can see two bamboos tied together with five-coloured thread, with various offerings around them and a woman plucking the threads of a koto. The bamboo twigs are decorated with short sleeves, which also represent prayers for better sewing and weaving skills.
(Toyohara Chikanobu, ‘Tanabata Festival’ from ‘Ladies in Waiting of the Chiyoda Palace’) 
This illustration portrays Tanabata as celebrated in the ladies’ chambers of the Palace. The altar is placed in the garden, and we can see strips of paper on it. As in the picture above it, the bamboos are decorated with strips and tied together with five-coloured thread. Moreover, something resembling rudder leaves is placed in the middle of the thread. The maid in the middle seems to be carrying offerings. Tanabata as celebrated in the ladies’ chambers must have been quite the gorgeous display.
In the beginning of the Edo era, Tanabata used to be reserved for the imperial court and daimyou households, but the increase of temple elementary schools led to the increase of educated people, so the festival became widespread among the masses who were now able to write down their wishes towards the stars.
The strips of papers decorating bamboo leaves can only be found in Japan!
We decorate bamboo leaves with our wishes written on strips of papers for Tanabata, a style that appeared in the Edo period. Besides Japan and China, Tanabata is also celebrated in Taiwan, Vietnam, Korea and various other Asian countries, but the custom of decorating bamboo with strips of papers can only be found in Japan.
(Utagawa Kuniyoshi, Tanabata of the Seventh Month) 
The possible mother and child illustrated above climbed on top of a clothes drying pole and are trying to support a bamboo stick. It looks like a pretty windy day.
It seems that decorating mountings for laundry poles with strips of paper was the norm. Even nowadays, we can see people decorating their verandas. Gardens and house frontages were decorated too.
As the Tanabata festival spread among the masses, the sky above the Edo towns would be filled with bamboo leaves floating in the wind.
(Hiroshige, The City Flourishing, Tanabata Festival from One Hundred Famous Views of Edo) 
What a magnificent view.
Hokusai also depicted the skies of Edo on Tanabata.
(Hokusai, Fuji at Tanabata from One Hundred Views of Mount Fuji) 
The bamboo leaves filled with decorations and paper strips are fluttering in the wind, while Mount Fuji rising in the distance leaves us with an unspeakable feeling of peace.
Incidentally, raising bamboo sticks in gardens or on mountings seems to be fixed on the evening of 6th July, but writing wishes on paper strips applying decorations happened even earlier than that. As Tanabata approached, bamboo sellers would make their appearance in the Edo towns where they walked around advertising their merchandise.
By the way, if you were asking why bamboo in the first place, one theory posits that when a cogon grass ring was placed in order to pray for a divine miracle for sound health (ritual named nagoshi no ooharae), on both sides of that ring were set bamboo sticks. Since the old days, these were believed to be places where gods dwelt, holy objects overflowing with vitality.
Nagoshi no ooharae at Oomiwa Shrine, Nara Prefecture. On both sides of the grass rings we can see bamboo sticks. 
The wishes written on five-coloured strips of paper are also exclusive to Japan!
Next are the decorations that give colour to the bamboo.
As mentioned previously, in both Japan and China, where Tanabata has its roots, the imperial court celebrated the event by offering five-coloured thread and praying for better sewing skills.
Kawahara Keiga’s ‘Tanabata’ picture from the series of annual events illustrations as depicted in Nagasaki. On the veranda we can see the altar with offerings, a koto and the bamboo adorned with five-coloured thread. 
As Tanabata became more popular among common folk, the five-coloured thread turned into the five-coloured strips of paper. Furthermore, the variegated colours turned into simple five separate colours: blue (or green), red, yellow, white, black (later purple). These colours were said to be linked to the ancient Chinese concept of wu xing.
Children are writing their wishes on colourful strips of paper and carefully place them on the bamboo (Utagawa Kuniyoshi, Tanabata from the series ‘Elegant Play of the Five Festivals’) 
The first time wishes were written on strips of paper was during the Edo era, but this was also an alteration of the way poems and wishes used to be written on rudder leaves.
We can see rudder leaves under the strips of paper on which the women are writing their wishes. Traces of an old custom as seen in Kikugawa Eizan’s ‘The Seventh Month’ from the series ‘Fashionable Twelve Months of Precious Children’. 
Originally, the main idea was sharing Orihime’s weaving and sewing luck and skills, but the types of wishes suffered as many changes as the times, and besides wishing for artistic accomplishments, people started wishing for meetings similar to those of Orihime and Hikoboshi. Now they’re even wishing for toys…
There also seemed to be the custom of washing inkstones on the day of Tanabata when people wished for better calligraphy skills.
The children in front are cleaning their inkstones. The first step of improvement is taking care of one’s tools. (Kiyonaga Torii, ‘Tanabata’ from the series ‘Precious Children’s Games of the Five Festivals’) 
They really did serve a purpose! Lovely Tanabata decorations
Strips of paper aren’t the only objects used to decorate bamboo. Gourds, watermelons, account books and windsocks…the great variety of decorations was appreciated by both children and adults. Decorations could also be made at home, but there were also a lot of people buying them from travelling merchants.
Both children and adults are having fun decorating the bamboo in Kunisada’s ‘Tanabata’ from ‘Tousei ha uta awase’. 
Each ornament looked pleasant and was fun to use, but it also had its own special signification. For example…
Windsocks – Signified Orihime’s threads. Also, charm against evil.
Nets – Signified the nets for catching fish, prayers for a big catch.
Kamiko (clothes made of Japanese paper) – Wishing for better sewing skills and no problems with one’s clothes.
Abacus, account book – Prayers for better penmanship.
Gourd – Prayers for sound health.
Watermelon – Prayers for abundant harvest.
It seems that the famous well-wishing sea bream used to be popular as a Tanabata decoration. Chinese lantern plants used to be pretty popular as well, but that was probably because Tanabata as celebrated in the Edo period was closely related to Obon.
Incidentally, the reason Chinese lantern plants were used to decorate the shelves dedicated to the spirits of the deceased for Obon was due to the kanji used to write their names (鬼灯 hoozuki : 鬼 =ki ‘spirit of a deceased person’ and 灯=akari/tou ‘light’/’lamplight’); they were basically the paper lanterns used to guide the spirits of the ancestors.
A girl is engrossed in her attempt to turn a Chinese lantern plant into a decoration (Keisai Eisen, ‘The Seventh Month, Tanabata’) 
There are also many other decorations that we have inherited from the Edo era and they too their own meanings.
What is the food you absolutely can’t miss for Tanabata?
What do you think is the essential Tanabata food? Exactly the one popping up on recipe sites around this time. And that would be…
By the way, it seems the 7th of July is Soumen Day (according to the National Federation of Dried Noodles Cooperatives).
Back in the Edo days, everyone, from the shogun to the imperial court to the common folk slurped their soumen for Tanabata. Soumen was also a popular Tanabata gift, so stores sent customers their special orders.
There is also a senryuu which says ‘Together with/ coloured paper/ I buy some soumen’ (I am on an errand to buy some soumen since I’m also buying some coloured paper as decorations for Tanabata), so soumen for Tanabata became a staple.
During the Heian period, there was the habit of making offerings of sakubei placed on rudder leaves. It is said this sakubei is the prototype of soumen, but it is believed this was actually made with wheat flour, rice flour and water, kneaded into the form of rope (nawa). It is not even known whether it was a type of noodles or a cake.
Other essential foods are the seasonal fruits and vegetables, like watermelon and melon.
The women are very busy with their Tanabata preparations. The Chinese lantern plant held by the woman on the right side of the image is being targeted by the child. The woman in the middle is decorating the bamboo with strips of paper, while the one on the left is carrying a plate full of watermelon. (Kunisada, ‘The Seventh Month’s Star Festival in the Nishijin District‘). 
Once Tanabata is over, everything goes down the drain
Bamboo would hover above the Edo sky, but the next day, or even on the same day, Tanabata was over, and everything would be exactly as it was before. The current of celebrating Tanabata on the night of the seventh is strong nowadays, but back then, the whole thing was over on the night of the 7th.
The offerings and bamboo were washed away by the rivers and sea, cleansing the impurities. This was also deeply connected to the Obon customs. Throwing out bamboo and decorations into rivers and the sea in order to remove all traces of the old is an environmental problem, so please don’t do it.
The great celebrations of the current Tanabata Festival
Currently, there are Tanabata festivals all over the country, but the one that was originally famous was the Sendai Tanabata Festival held every year between the 6th and 8th of August.
Sendai Tanabata Festival 
The Tanabata Festival became so popular in Sendai because it was said to be related to a certain famous daimyou of the Warring Period.
The One-Eyed Dragon, Date Masamune. 
Date Masamune, the founder of the Sendai domain, promoted Tanabata and left 8 waka about it.
Starting with the second half of the Edo period, Tanabata became popular among common folk in Sendai like it was in Edo and on the evening of the sixth day of the seventh month, people would set bamboo sticks decorated with strips of paper in front of their houses and pray to the stars, only to throw them into the river on the morning of the 7th. Just like in Edo.
The great events we know nowadays have their origin in 1927 (Showa 2) when they began as promotional events made by volunteers of the shopping district in order to drive away people’s sad thoughts.
Speaking of which, besides Sendai’s Tanabata Festival, there are two more locations that are part of ‘Japan’s Three Great Tanabata Festivals’: the Shounan Hiratsuka Tanabata Festival (Hiratsuka, Kanagawa Prefecture) and the Anjou Tanabata Festival (Anjou, Aichi Prefecture). Both started in the 1950s, after the war.
*The Japanese terms for the twelve months are basically 1-12 + 月 (‘moon’).
**Etymology time, yay! The kanji for ‘Orihime’ (織姫) mean ‘Weaving Princess’. I don’t know Chinese, but the characters used for her name (織女) + Japanese reading (Shukujo) mean ‘Weaving Woman’. Note that 姫 can also mean ‘girl’. It’s a bit different in Hikoboshi’s name, because in Japanese it means ‘Boy Star'(彦星), while the Chinese version (JP reading: Kengyuu 牽牛) means ‘Cowherd’. Incidentally, Tentei (天帝) is ‘Heaven/Sky Emperor’.
***Tanabatatsume (棚機津女) means ‘Weaver Girl’. ‘Shichiseki’ is the reading of 七夕, what we currently know as ‘Tanabata’ and means ‘Seventh Evening’.
****Why ‘drops of the Milky Way’? Not because of the Milk 😀 In Japanese, the Milky Way is known as 天の川 (Amanokawa), the River of Heaven.