Christmas is a real-life holiday commonly celebrated every December 25th on Earth.
In the real-world universe, Christmas is a holiday celebrated by Christians to honor the birth of their savior, Jesus Christ. However, in the alternate future that Invader Zim takes place, religion is all but non-existent, and thus many aspects of Christmas are thus very different and far more secular. The most notable of these differences is that Jesus has been seemingly supplanted as the main focus of the holiday by Santa Claus, who is all but worshipped by all humans on Earth.
However, many of the traditions have remained in use: homes and businesses are usually festooned with long strings of brightly-colored lights, wreathes and tinsel, carols are sung, and many malls still hire others to pose as Santa for children. The distribution of peppermint candy canes and the exchange of Christmas presents are also common.
Many centuries after the events of "The Most Horrible X-Mas Ever", the Santa suit that Zim created returns yearly from outer space, having become enormous and feral. This led to the human race developing a new Christmas tradition: raise a giant dome over their city, and deploy two giant plates bearing cookies and milk to appease the monstrous Santa.