Screenshot via MiYoHo YouTube
For the Where the Light Wanes Lantern Rite Tale, Hongyu, a guard in Liyue, will ask you to collect some Xiao lanterns that have drifted off. It is his job, but like everyone else in Liyue right now, he is just too busy to do it.
Lantern Rite Tales will reward you with Festive Fever that will increase the overall Fever level of the Lantern Rite event, unlocking new activities and rewards.
All the waypoints will be marked on the map one by one as you collect them. The first lantern can be found near Mt. Tianheng. It is trapped in a large root, although it is easier to climb the cliff behind the root to get to the lantern. When you reach the lantern, you can jump across to the root to collect it.
Screenshot via MiYoHo YouTube
The Theater Mechanicus is now available to play in Genshin Impact. To take part, you will need to visit Ruijin in Liyue Harbor. Make sure you complete The Origin of the Lanterns and Liyue: Theater Mechanicus quest to unlock this activity.
There are lots of individual challenges to complete in the Theater Mechanicus that will reward you with Peace Talismans. These can be then be used in the Xiao Shop to purchase items over the course of the Lantern Rite event.
It will cost one Xiao Lantern to play a round of Theater Mechanicus. You can attempt the challenge in either Single Player or Co-Op Mode, but Co-Op only supports two people at once.