[Huliwang]

I think these burning of money and other offerings to the dead are for relieving the conscience and guilts of those livings doing the offerings. They feel more at peace and have better dreams instead of nightmares. 
For example my grandma wud dreamt often of my grandpa appearing in her dreams without shirt and living in a tent. After deciphering her dreams she would burn some paper shirts, shoes, hats and a bungalow for my grandpa. After that she feel peaceful and had good dreams. This is just one example of how burning offerings help the livings........