Bhagavata Purana(8.18.5) says Lord Vishnu took birth as Vamana on Shravana Dvadashi. This is exactly the time of Uthradom (Onam Eve). The Onam festival is celebrated for four days until Purnima. Even South Indian tradition agrees that Onam marks the birth of Lord Vishnu as Vamana.
Onam is a celebration of birth and victory of Lord Vishnu as Vamana and returns of his devotee king Mahabali to earth. Mahabali comes back every year from Sutala to see his land & celebrate Lord Vamana's birth at Vamana temple in Thrikkakara (=“place of holy foot”) in Kochi.
From ancient days, Onam was celebrated in Tamilakam (Tamilnadu-Kerala) not as the festival of Bali but as the birthday of “Asura destroying” Lord Vishnu. This is mentioned in ancient Sangam literature in a poem called Maturaikkāñci. Nairs still keep Onam battle traditions of this poem.
This tradition of celebrating Onam as the birthday of Vishnu continued to be celebrated in the middle ages. Medieval literature like the 10th century Divya Prabandham shows Onam continued to be celebrated as a festival of Lord Vishnu. Rice and fruits were prepared and offered to Vishnu.
That Onam was a festival of Lord Vishnu is confirmed by Independent sources. William Logan, a Scottish civil servant of 19th cent noted in his “Malabar Manual” that Onam was the day on which Vishnu descended to make his people happy. Along with Vishnu came Vishnu's devotee Bali.
Francis Day was a 17th century East India Company administrator who lived in Kerala and Tamilnadu. He wrote a book about Kerala based on his ethnographic study. In his book, he reproduced the stories of Onam he heard from local people. Francis Day also writes in his book that Keralites of his day believed Onam marked the day when Lord Vishnu wandered about the earth. Along with Vishnu came his devotee Mahabali.
The earliest record of Onam in Kerala comes from the Thirikkara Vamana temple (861 CE). Even today, Onam is celebrated here as the birthday of Vamana. It is believed that Bali also returns to worship the Lord every year on this day. Processions of Vamana Murti(“idol”) are carried out.
Unlike Abrahamic religions, Hinduism does not have any centralizing authority like the pope. Because of this reason, the mode of celebration of the Onam festival has diversified over centuries among various castes and communities who celebrated the festival in different ways.
This does not change the fact that Onam was originally a festival that marked the birthday of Vishnu as Vamana. And traditional Onam celebrates this aspect even today. Even today, the most important part of Onam celebrations is Thrikkakara Appan, which is a clay Pyramid representing Lord Vamana who is worshiped as the guest.
Marxists have been pitting Vamana against Bali. But such a dichotomy cannot be supported even by the story in Bhagavata Purana. Vishnu comes to test Bali's generosity. He becomes satisfied & grants Bali any boon he wishes. But Bali has only one wish. To always be with Vishnu. Vishnu grants the wish. He leaves Vaikunta and repairs to Bali's new abode Sutala where there is no fear, hatred, disease. Srimad Bhagavatam (5.24) says Lord Vamana served as the gatekeeper of Bali in Sutala which is grander than Svarga. Vamana kicked Ravana out of Sutala when Ravana invaded Sutala. Such is the beautiful relation between Bhagavan and Bhakta.
Just a minor detail. While Onam/Vamana Jayanti in ancient days was celebrated on Shravana Ekadashi, it has from medieval times to this day been celebrated during Bhadrapada Ekadashi. There have also been regional variations and some communities still prefer Shravana Ekadashi. For all that nonsense about 'Aryan' Vamana and 'Dravidian' Mahabali. Here is a pre-modern painting from Mankot (c.1700). The dark-skinned dwarf is beautiful Vamana. And the Brahmin with choti in the painting is none other than Mahabali. Mahabali was a descendant of Rishi Kashyapa.