Aurora, Amazing Northern Lights

Understanding is very incomplete. There are three possible main sources:
1. Dynamo action with the solar wind flowing past Earth, possibly producing quiet auroral arcs ("directly driven" process). The circuit of the accelerating currents and their connection to the solar wind are uncertain.
2. Dynamo action involving plasma squeezed towards Earth by sudden convulsions of the magnetotail ("magnetic substorms"). Substorms tend to occur after prolonged spells (hours) during which the interplanetary magnetic field has an appreciable southward component, leading to a high rate of interconnection between its field lines and those of Earth. As a result the solar wind moves magnetic flux (tubes of magnetic field lines, moving together with their resident plasma) from the day side of Earth to the magnetotail, widening the obstacle it presents to the solar wind flow and causing it to be squeezed harder. Ultimately the tail plasma is torn ("magnetic reconnection"); some blobs ("plasmoids") are squeezed tailwards and are carried away with the solar wind; others are squeezed towards Earth where their motion feeds large outbursts of aurora, mainly around midnight ("unloading process"). Geomagnetic storms have similar effects, but with greater vigor. The big difference is the addition of many particles to the plasma trapped around Earth, enhancing the "ring current" it carries. The resulting modification of Earth's field makes auroras visible at middle latitudes, on field lines much closer to the equator.
3. Satellite images of the aurora from above show a "ring of fire" along the auroral oval , often widest at midnight. That is the "diffuse aurora", not distinct enough to be seen by the eye. It does not seem to be associated with acceleration by electric currents (although currents and their arcs may be embedded in it) but to be due to electrons leaking out of the magnetotail.