During the First World War, the fields of Flanders were dug over. Not by farmers, but by trench digging, shell and mortar fire, etc. Now it is a curious thing, but the seeds of the red poppies found in Europe can lay in the ground for years without germinating, and then grow after the ground has been disturbed. Consequently, sometime after the battles, the sites of devastation were transformed into a blaze of colour.
The poppy has become a symbol of that time. Every November, when Americans celebrate Veterans Day, the British have Rememberance Day. Poppy wreaths are laid at the memorial to the Unknown Soldier, etc. A national charity collects money for vetarans by selling artificial poppies -- wearing a poppy shows that you remember and that you gave. The same thing happens in the US, for Memorial Day.
It does also have something to do with morphine. Poppies are also a symbol of relief from life's pain, and have been since long before WWI.[...and more, from Helen Bransfield:]
IN FLANDERS FIELDS by John McCrae
In Flanders fields the poppies blow
Between the crosses, row on row,
That mark our place: and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.
We are the Dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved, and were loved, and now we lie
In Flanders fields.
Take up our quarrel with the foe:
To you from failing hands we throw
The torch; be yours to hold it high.
If ye break faith with us who die
WE SHALL NOT SLEEP, THOUGH POPPIES GROW
IN FLANDERS FIELDS.