The Shulhan Aruch (Orah Haim 514:5; listen to audio recording for precise citation) rules that it is forbidden on Yom Tob to light a "Ner Shel Batala," meaning, a candle which is not needed for any particular purpose. Although Halacha generally allows lighting a candle from an existing flame on Yom Tob (as opposed to striking a match to create a new flame, which is forbidden), this applies only if the candle is needed for some purpose.
The Mishna Berura (commentary by Rav Yisrael Meir Kagan of Radin, 1839-1933) clarifies that the category of "Ner Shel Batala" includes candles lit for the purpose of demonstrating one’s wealth. (Apparently, it was common for wealthy people to light extra candles to show that they are able to afford abundant light.) This, too, would be forbidden on Yom Tob, since the light of the candle does not serve any purpose. However, the Mishna Berura adds, it would certainly be permissible to light candles to enhance the atmosphere in the home for Yom Tob, such as if one wishes to add extra light or have a "candlelight dinner." In these situations, the candles serve the purpose of a Misva – to enhance the enjoyment of Yom Tob – and it would therefore be permissible to light candles from an existing flame for these purposes. The Mishna Berura similarly rules that one who is hosting a Berit Mila in his home on Yom Tob may light candles in honor of Eliyahu Ha’nabi, as is customarily done at a Berit Mila. (Of course, on Yom Tob one should not carry a plate with money as is the custom at a Berit Mila held on a weekday.) Since this is done to enhance the Misva of Berit Mila, the Mishna Berura explains, it is permissible.
In his Be’ur Halacha, he addresses the question of whether a person who has a Yahrtzeit on Yom Tob may light the traditional Yahrtzeit candle. He writes that ideally, the Yahrtzeit candle should be lit before Yom Tob, but if one did not light the candle before Yom Tob, then he should light it in the synagogue. According to all opinions, candles lit in the synagogue involve a Misva, as they enhance the atmosphere of the synagogue. Therefore, it would certainly be permissible to light a Yahrtzeit candle on Yom Tob in the synagogue. The Mishna Berura adds that if this is not feasible, then one may light the Yahrtzeit candle in his house, relying on the lenient ruling of the Ketab Sofer (Rabbi Avraham Sofer, Hungary, 1815-1871). Preferably, he writes, if one must light the Yahrtzeit candle in the house, he should light it in the room where he eats the Yom Tob meal.
Hacham Ovadia Yosef, in his Hazon Ovadia (Hilchot Yom Tob, p. 61; listen to audio recording for precise citation), cites different views among the Halachic authorities on this issue. Some forbid lighting a Yahrtzeit candle on Yom Tob, since it does not provide any actual benefit, whereas others rule leniently, noting that there is a Misva to light a candle in memory of one’s deceased family member on the Yahrtzeit. Hacham Ovadia follows the Be’ur Halacha’s ruling that one should light the Yahrtzeit candle in the synagogue, as candles in the synagogue fulfill a Misva and are thus permissible on Yom Tob according to all views.
It should be emphasized that we speak here only of lighting a candle from an existing flame; it is forbidden to strike a match to create a new flame under any circumstances.
Summary: It is permissible to light a candle on Yom Tob from an existing flame, if this is necessary for the Yom Tob celebration, such as to provide light or to enhance the atmosphere, or for some other Misva; one may not light a candle for no purpose. One who observes a Yahrtzeit on Yom Tob should ideally light the Yahrtzeit candle before Yom Tob; if he did not, then he should preferably light the candle in the synagogue, or, at very least, in a place in his home where it enhances the Yom Tob.
