Christmas is a major holiday in Italy, which means Italians celebrate lots of great, unique Christmas traditions! Across Italy, Natale tends to be a family-centric holiday, a time to stay at home (and eat!) with loved ones.
But customs also vary from city to city, from exactly which dishes are served, to when to open presents, making every region an interesting place to enjoy the holidays.

Italians really feel the atmosphere since late November, but the Christmas season officially starts on December 8th, the Day of Immaculate Conception. 
On this day many Italian families decorate their home and trees, bake cookies, wrap their presents, and schools and offices are formally closed. From this day on, up to December 26th, the holiday atmosphere gets bigger and bigger: in many Italian streets decorations and huge Christmas trees are displayed, presepi (Nativity scenes) are placed outside for all to see, and the Christmas smell — as I love to call it — of chestnuts, chimneys, mulled wine, and Italian delicacies, is perceived on every corner.
Also, in some Italian cities, zampognari (bagpipe players) can delight you with merry songs.
If you stroll down the street, you will be thrilled by all these jolly habits in preparation of the 3-day celebration, starting from the 24th.

Christmas is a very religious time in Italy. Buon Natale CELEBRATING CHRISTMAS in ITALY 
A manger scene (presepio) is set up in each home.
The Christmas season is filled with much singing and music.
The streets, shops and homes are decorated. Fruit shaped decorations are seen everywhere.
For twenty-four hours before Christmas people fast (do not eat).
This is followed by Christmas Eve dinner called a Cennone.
This feast includes fish, pasta, vegetables, fresh fruits and special sweets and cakes.

Decorations and huge Christmas trees can be found in main piazzas in Italy
Like in front of the Colosseum or in Milan’s Piazza Duomo, and Babbo Natale (Father Christmas, the Italian version of Santa Claus) spreads holiday cheer.

Presepi - Presepio
Along with the fancy lights, wreaths and trees, presepi (nativity scenes) are displayed in many churches and piazzas.
Crafting these ornate works of art by hand remains an artisanal tradition in many parts of the country.
If you want to go to the source, head to Naples; the southern Italian city is world-famous for their hand-made presepi.
It still has whole streets with one workshop after another devoted to the craft.
Generally, presepi are assembled on December 8, the Feast of the Immaculate Conception, with the baby Jesus added on Christmas Eve.
The Presepe Tradition
The presepe is the tradition of Christmas nativity scene displays, found in most cities in Italy. The word refers specifically to the crib, first created by Saint Francis of Assisi in 1223 CE.
In Rome, the annual 100 Presepi exhibition displays about 200 nativity scenes from artists across Italy and other countries.
Rome also houses the Museo del Presepio “Angelo Stefanucci”, which displays over 3000 presepi, made from a wide range of materials including plaster, glass, and even eggshell, and a life-size nativity scene is displayed annually in Saint Peter’s Square.

Common throughout Italy are the Christmas sweets
"panettone" (cake filled with candied fruit), "torrone" (nougat) and "panforte" (gingerbread) made with hazelnuts, honey and almonds.
All Christmas sweets, as a rule, contain nuts and almonds.
Peasant folklore theorizes that to eat nuts favors the fertility of the earth and aids in the increase of flocks and family. In ancient Rome, honey was offered at this time of year so that the new year might be sweet.

The Christmas season in Italy goes for three weeks, starting 8 days before Christmas known as the Novena. During this period, children go from house to house reciting Christmas poems and singing.
In some parts shepherds bring musical instruments into the villages, play and sing Christmas songs.

In the week before Christmas children go from house to house dressed as shepherds, playing pipes, singing and reciting Christmas poems. They are given money to buy presents.
A strict feast is observed for 24 hours before Christmas Eve, and is followed by a celebration meal, in which a light Milanese cake called panettone features as well as chocolate.

On christmas Eve the dinner is called cenone which is a traditional dish of eel.
Christmas lunch is Tortellini in Brodo which is filled pasta parcels in broth, also served is cappone which is boiled capon, or roasts are served in central Italy.
Another famous cake is pandoro which originated from Verona.

Christmas in Italy may not look like Christmas back home, but it’s taken very seriously here and is an important holiday to all Italians. Christmas is “Natale” in Italian, and to wish people a Merry Christmas you’ll say, “Buon Natale.” Instead of images of Santa Claus everywhere, however, the Christmas image you’re going to see on display throughout the country both in churches and outdoors is the nativity scene. It’s called a “presepio” in Italian, and you’ll find them everywhere.

The traditional meal on Christmas Eve is meat-free (fish doesn’t count) and the traditional Christmas day meal is centered around meat. Christmas Eve masses are held in churches all over the country, usually at midnight, and many cities and towns have bonfires or public celebrations on Christmas Eve as well. Some places will string lights through town or put up brightly-decorated Christmas trees, but by far the more universal Christmas decoration is the presepio.

Even if you’re not particularly religious, there’s something very special about seeing a country pull out her holiday finery and put it on display.
While Christmas is certainly a time for general celebration, it’s an important family holiday, so taking a vacation in Italy at Christmas might feel a bit like you’ve been invited into a friend’s home for the holiday.
 If you are religious, then making a trip to Vatican City for Christmas might be the realization of a life-long dream - so plan to be in St. Peter’s Square in time for the noon address by the Pope on Christmas Day.

When you exchange gifts depends on where in Italy you are!
Ask an Italian when her family opens gifts, and it might give you a clue to where she’s from! Gifts are commonly exchanged on Christmas Day after lunch—sometimes with the belief that Jesus has delivered them – take that, Santa!. But some smaller, northern Italian cities believe that the blind Saint Lucia brings gifts for children on December 13, so they open them that morning.

Where to Spend Christmas in Italy: Rome
In Rome, most major tourist sites are still open daily except for Christmas and New Year’s Day. (The Vatican is also closed in the afternoon of Christmas Eve and New Year’s Eve.) From late November to early January there is a large Christmas market in Piazza Navona; however, it’s become quite touristy and lacks the authentic traditions of an Italian market. For a more typical, local experience, head to Piazza Mazzini.

Where to Spend Christmas in Italy: Florence
The holiday season in Florence is packed with festivities.
You can sit back and relax while watching a Christmas choir perform the Nutcracker, head over to Piazza Santa Croce to get some last-minute shopping done at the German Christmas Market, or design a mix of both on one of our custom tours of Florence. 

Where to Spend Christmas in Italy: Naples
Naples, along with Rome, is one of the mildest cities during the Italian winter, with temperatures around 50 degrees F. That said, it does rain quite often, so indoor activities such as museums and royal palaces are ideal attractions for this time of year. If you're up to braving the rain, a trip to Pompeii is well worth it, as the crowds have thinned enormously from their summer peak.
Naples is famous for its presepi (nativity scenes), with hundreds erected across the city.

Where to Spend Christmas in Italy: Venice
Christmas in Venice is a beautiful affair—during the holiday season, the customary fog makes the buildings look as though they are floating on clouds. There are several Christmas markets, such as Natale in Laguna at Campo Santo Stefano. Santa Claus can at times be seen running around on stilts, alongside a companion in Carnevale dress.

New Year’s Eve in Italy
New Year’s Eve coincides with the Festa di San Silvestro in Italy, and is traditionally a time to both literally and figuratively throw out the past.
At midnight, people throw kitchenware, appliances, clothes, and furniture out of their windows onto the street, a tradition most common in the southern part of the country. The day is celebrated with a big dinner called Il Cenone, featuring lentils right after midnight; the money shaped food is thought to bring good luck.
A slightly less expected tradition in Italy is the wearing of red underwear, referencing the medieval belief that red wards off sickness and bad luck. Italians are so passionate about this tradition that red underwear can be bought all across town, and if a friend hears you do not have any, they will likely gift you some! Of course, fireworks, music, dancing, spumante, prosecco, and festivities are equally important.

The Epiphany (Feast of the Three Kings), on January 6th, is the last day of Christmas celebrations
The Legend of La Befana
A woman was busily sweeping her house when the Three Wise Men came to her door.
They said they were seeking the new King who was born in Bethlehem.
When they asked her to show them the way, she replied that she was much too busy. Later, she felt sorry that she had not helped the Wise Men, so she set out after them. She searched and searched, but she never found them. Because La Befana felt so bad, she continues to travel throughout the country at Christmas time, searching for the Christ Child.
Italian children believe they get a visit from La Befana , a kind but ugly witch. She is dressed in a long black coat with a black scarf tied around her head. She brings gifts to each child on January 6th, which is the Epiphany (feast of the Wise Men).
They believe that La Befana flies from house to house on a broomstick, slides down the chimney and fills the stockings of the good children with gifts, but leaves a lump of coal for the bad children.
The most important part of the season is actually the Epiphany, celebrated on January 6, and this is when children hang stockings out and when most people exchange presents.
An old woman on a broom, not Santa Claus in a sleigh, is responsible for bringing gifts on Epiphany - she’s called La Befana.
In Italy the children wait until Epiphany, January 6, for their presents.
According to tradition, the presents are delivered by a kind ugly witch called Befana on a broomstick. It was said that she was told by the three kings that the baby Jesus was born, she was busy and delayed visiting the baby.
In certain parts of Italy the children hang their stockings near the head of the bed. An old lady is supposed to visit each child and leave sweetmeats or coal in the stocking (depending whether the child has been good or bad.)

Holiday Season in Italy
On the Italian holiday calendar December 25 isn't the only special day.
Throughout December and January there are a number of religious holidays to mark the season.

DECEMBER 6th
La Festa di San Nicola - The festival in honor of St. Nicholas, the patron saint of shepherds, is celebrated in towns such as Pollutri with the lighting of fires under enormous cauldrons, in which fave (broad beans) are cooked, then eaten ceremoniously.

DECEMBER 8
L'Immacolata Concezione - celebration of the Immaculate Conception

DECEMBER 13
La Festa di Santa Lucia - St. Lucy's Day

DECEMBER 24
La Vigilia di Natale - Christmas Eve

DECEMBER 25
Natale - Christmas

DECEMBER 26
La Festa di Santo Stefano - St. Stephen's Day marks the announcement of the birth of Jesus and the arrival of the Three Wise Men

DECEMBER 31
La Festa di San Silvestro - New Year's Eve

JANUARY 1
Il Capodanno - New Year's Day

JANUARY 6
La Festa dell'Epifania - The Epiphany.

Selected websites & blogs Events on italian Holiday traditions and Christmas in italy

https://www.walksofitaly.com/blog/things-to-do/christmas-traditions-in-italy

One of the most important ways of celebrating Christmas in Italy is the Nativity crib scene
https://www.whychristmas.com/cultures/italy.shtml

Christmas in Italy: Traditions Food and Destinations - December: A Month Full of Christmas Traditions
https://selectitaly.com/blog/all-you-can-italy/christmas-in-italy/

Christmas celebrations and traditions in Italy And what to see and what to do in Italy during the Christmas season
http://slowitaly.yourguidetoitaly.com/christmas-in-italy/

Where to Spend Christmas in Italy
https://www.contexttravel.com/blog/articles/where-to-spend-christmas-in-italy