It became associated with celebrations during Lunar New Year because it is a time when many people pray for prosperity, health and academic success.
The tradition is directly tied to a banyan tree, which is common in southern China’s subtropical climate. Lam Tsuen is located in the New Territories (historically, a rural farming region), so the wishing tree reflects a community-centered ritual. In the context of today, Hong Kong is highly modernized, so this tradition has now become commoditized to attract tourist. Nonetheless, it is still a very interesting tradition to learn about and experience firsthand.