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The word Christmas comes from the old English "Cristes maesse" meaning Christ's Mass. The Holiday celebrates the birth of Jesus Christ. The actual birthday of Jesus is not known; therefore, the early Church Fathers in the 4th century fixed the day around the old Roman Saturnalia festival (17 - 21 December), a traditional pagan festivity. The first mention of the birthday of Jesus is from the year 354 AD. Gradually all Christian churches, except Armenians who celebrate Christmas on January 6 (the date of the baptism of Jesus as well as the day of the three Magi), accepted the date of December 25th.
The custom of gift-giving on Christmas goes back to Roman festivals of Saturnalia and Kalends. The very first gifts were simple items such as twigs from a sacred grove as good luck emblems. Soon that escalated to food, small items of jewelry, candles, and statues of gods. To the early Church, gift-giving at this time was a pagan holdover and therefore severely frowned upon. However, people would not part with it, and some justification was found in the original gift giving of the Magi, and from figures such as St. Nicholas. By the middle ages gift giving was accepted. Before then it was more common to exchange gifts on New Year's Day or Twelfth Night.