Christmas Nights was a free holiday bonus disc, with christmas themed extras for the game Nights into Dreams. In my opinion, these extras, or something similar, should've been included in the full title as well.
Christmas Nights is even more simplified then the regular Nights game. You have two tracks from the full game, one for each character you pick. Both levels feature Gillwing as the endboss. Once completed, you gain chances to unlock your presents, the more scores you gained, the more chances you recieve. Unlocking presents is a bit of a misnomer though, what you really gain are chances in a pairing game. You have to unfold two of the same presents to "earn" them, therefore it is wise to draw down the locations to a piece of paper if you are very bad at memorization.
Given the easiness of the selectable levels, you can get a second try at unlocking the presented items very quickly. Therefore, the only reason why it takes a lot of time to unlock everything is the sheer amount of extras. Most of the extras are simple, low-resolution art galleries, but some of the others unlock new gameplay methods.
Among the extras are: Karaoke mode, Score attack mode, A-Life Diary, complete Sound Test mode where you can freely mix the game music (the ingame music is affected by the mood of the inhabitants of a level), a Christmas mode that changes all the ingame graphics, and the most noteworthy bonus: Sonic the Hedgehog.
Titled Sonic the Hedgehog into Dreams, this minigame lets you control Sonic the same way you control Claris or Elliot, except that you are not limited by the "Dream Over" effect. Also, you can jump very very high, and run very, very fast. This free mode is a very nice attraction, but it also visualizes a few problems in the game engine, such as the short draw distance, and the fact that theres absolutely no fog effect - polygons are cut down as a whole. The endboss is a real treat however, you face the opera bunny boss from the regular game, reskinned as the nefarious Doctor Robotnik, complete with his own theme song.
The game can also unlock extras based on when you play. From simple changes based on the time of hour you launch the game, to more elaborate ones, such as changing NiGHTS to its archnemesis, Reala, as an April 1st prank. This latter is also unlockable once you got every other present.
With all these extras, Christmas Nights may hold much more replay value to casual gamers then what the regular game did.