For all the years of my teaching career, I could travel to Japan only in the summer, so I was there for a lot of O-Bon periods.
Unlike New Year, it's not a legal holiday, nor is it the same dates in every part of the country. Trains may be crowded, but things tend to remain open. Occasionally you will find that a small, family-owned business is closed as the family travels to see its rural relatives, but you will have no trouble finding places to eat, stay, and shop.
You may be able to find public or neighborhood celebrations in the more residential areas of the cities. You may even be asked to join the simple line and circle dances that people do for the festival.
But it's going to be hot and muggy. The dances take place at night, which is a good thing, considering the weather.