The day celebrates a ceremony that was held on March 12th 1913, during which Lady Denman, the wife of the then Governor-General Lord Denman formally named and founded the city. 

Canberra was selected as the location for Australia’s capital in 1908 as compromise rather than choosing either Sydney or Melbourne. 

The word “Canberra” is popularly thought to derive from the word Kambera or Canberry which is claimed to mean “meeting place” in the old Ngunnawal language, one of several Indigenous languages spoken in the district by Aboriginal people before European settlers arrived. 
source: Wikipedia 

Until 2007, Canberra Day was celebrated on the third Monday in March, but it was moved to the second Monday in March as that means it would fall more often close to the actual date of March 12th. 

Annual events associated with Canberra Day include the Canberra Festival, which runs for two weeks in the lead up to Canberra Day. It is an outdoor community event that involves everything from a car show to fireworks to a hot air balloon spectacular. 

As part of Canberra’s birthday celebrations, the Canberra Citizen of the Year Award is presented by the Chief Minister in March each year. Introduced in 1989, the award recognises citizens who have made a major contribution to the community.