In this photo above, the blurry figure in the foreground is Ian. (The setting needed to capture the aurora leads to blurring of the foreground). This was just to prove that these are indeed the actual observed northern lights and not just something we googled for images. Behind Ian you can still see a bit of the twilight from sunset ... this view is looking north - the Arctic Ocean "beach" is in the background.
But what causes the aurora? The sun sends a constant stream of charged particles toward Earth. Some of these interact with the outer portions of our atmosphere ... the energy from this interaction gets transferred to oxygen and nitrogen present in the atmosphere (about 100 km above the surface of Earth). This excites the oxygen and nitrogen ... but the oxygen and nitrogen don't stay excited forever ... and to get rid of this excess energy, they emit characteristic wavelengths of light, which then are viewed from below as the aurora. (Again, wikipedia gives a good - albeit very detailed - description if you want the real hard-core details).
Whatever the cause, they are a spectacular sight.