According to Hindu mythology, Manali was the home of the lawgiver Manu (after whom the town is named). Legend has it that when a flood deluged the earth, Manu and the gods were towed to dry ground by a giant fish, which was the seventh `avatar' of the god Vishnu. The area where Manu eventually found refuge was Manali.
Whether that's actually how it happened or not, Manali remained a fairly quiet place, more or less unknown to the outside world, till pretty recently. During the 20th century, the British started to frequent the town- its climate and natural beauty were equable enough- and Manali gradually began to acquire the reputation of a tourist destination. This reputation got a bit tarnished during the 1970s and 80s, however, mainly because of the discovery that marijuana grown around the town was particularly good. After two decades or so of happy-go-lucky, joint-smoking hippies, Manali's now turning into a base camp for trekkers and intrepid mountaineers. Honeymooners and families from all across India still descend on the town throughout summer, though.