Collected on the Internet:Many adult congregants and children also come to services in costumes depicting the Purim characters and other notable figures from Jewish history and contemporary life. According to one interpretation, this is because just as God was 'hidden' throughout the Purim story, so do we 'hide' behind masks and costumes.Pleasant as it is to imagine a commitee of Rabbis, gathered around a large oak table, making decisions and creating customs ('Yes! Masks! What a wonderful way to emphasize this important theological message!') the truth is far more mundane: The custom of donning masks and costumes on Purim, like many of our wedding and burial rituals, was borrowed from the surrounding, non-Jewish culture.
Masquarading at Purim was first reported in Provence in the early fourteenth century where the Jews of Italy, who observed Catholics masquarading at Lenten carnival at around the same time of year, adopted the custom for themselves. (The first mention of Purim costumes in Jewish writing appears in the Responsa of Yehuda Minz, an Italian and one of the great Rabbis of the 15th century.) The custom grew in popularity under the influence of Fastnacht, a German Mardi Gras celebration. It wasn't tied to the idea of God's 'hiding his face' until much later.
[Does it matter? No, I'll still be dressed, in the tradition of my fathers, as a pimp this Purim. I popularize the origin of this traditon and others, only as a way of rebuking those of you who turn your noses up at things like blue shirts or sushi on the grounds that they're insufficiently Jewish.]