The root of happiness and its main ingredient is contentment - the peace of mind, the state of mental or emotional satisfaction, the willingness to accept present circumstances.
If we are not content with our lives, we cannot be happy. We may experience bursts of joy when something goes exceptionally well and think it is happiness. But unless we are content with ourselves and what we have, these bursts will not last for a long time. They will prove to be transient feelings of pleasure, not enduring state of our being.
Of course, our culture not only does not promote contentment, but scorns at it. We are conditioned to struggle for success, and what we have is never enough, as the sky is the limit. It seems strange not to want to have a bigger house, better salary, higher corporate position.
But if we step away from it all for a second, we may realize that what the society praises is, in essence, a rat race - exhausting, unremitting, and competitive activities that become our routines.
Seneca said "True happiness is to enjoy the present, without anxious dependence upon the future, ...to rest satisfied with what we have, which is sufficient, for he that is so wants nothing.” It is not easy to suddenly become satisfied with ourselves. But when we do, we'll be rewarded by serenity and happiness.
But if we take the notion of contentment to the extreme, what is to prevent people from laying in dirt under the blue skies, wanting nothing, doing nothing? (see related post Does Happiness Require Settling?)
That's where moderation comes in. As we may overdo the drive to succeed to ridiculous and sometimes dangerous levels, so we may overdo contentment in the pursuit of happiness. There is a fine line between being content and apathetic; between being motivated or excited and being unsatisfied, feeling like a failure.
Throughout the recorded history, human beings in general were never content. The mankind has been always struggling against the current conditions. We are constantly at war with some enemies for land, power, resources, differences in religious believes, etc. There seems to be some part of us that is just never content with our lot, whatever it is. I guess this is partially what drives the progress, but it also what keeps us unhappy.
It is important to recognize and acknowledge the importance of both contentment and moderation are, and to balance them out correctly; to have goals in life to aspire to, while being content with the present, and feeling happy with whatever we have.
Contentment is allowing the entire being to flow with the rhythms and harmonies of the universe;
Moderation is the golden mean that brings everything in equilibrium.
Together, they are the way to happiness.