We focus on Christ all year long. My kids understand that Christmas is a celebration of Christ's birth...but I don't confuse a festival (Christmas) with a holy day (say, Easter). All year, perhaps with more focus during the holidays, we learn of Christ and try to be like Him. I do let Christmas day itself be about the fun of giving and getting, though. When it falls on the Sabbath, of course we behave accordingly.
We embrace Santa Claus! When my older child let on that he knew, we shared some stories of Christmas miracles involving Santa Claus and his spirit. Now, my son is in the club, so to speak, and gets to get back up after "bedtime" and be helpful, sipping cocoa or eggnog with mom & dad. It's all good. He gets to "be" Santa a little now, which is fun.
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