Christmas in Israel
Although the Christmas Story took place in Israel, Christmas isn't widely celebrated in the country at all! Only about 2.5% of the population of Israel are Christians. Christmas isn't a public holiday in most of Israel!
For most people in Israel, Christmas is a 'normal working day' (unless the 25th December is at the weekend) and in major cities, such as Jerusalem, you're fairly unlikely to see many (or any) signs of Christmas, unless you specifically go to 'tourist' areas or areas with churches in them.
The Jewish festival of Hanukkah is often celebrated around the same time as Christmas. In 2018, Hanukkah will be from the evening of Sunday, 2nd December until the evening of Monday, 10th December. (There are no public holidays in Israel for Hanukkah either!)
There are Christmas services and activities in the Christian Churches in Israel. The most famous of these might be the carol concerts and services held at the Dormition Abbey (which is a Benedictine Monastery) in the Church of Zion, on Mount Zion in Jerusalem. More Jewish Israelis are starting to go to concerts like this. The YMCA in Jerusalem also holds a big Christmas Bazaar as well as a Christmas Eve carol concert and singalong.
The largest Christian population in Israel in in Nazareth (the town where Jesus grew up). Nazareth has lots of Christmas lights on the streets and outdoor markets to celebrate both Christmas and Hanukkah. There is a Christmas Eve parade which ends at the Church of the Annunciation. Then there's a big firework display and the Midnight Mass Service. The parade represents the journey that Mary and Joseph took in the Christmas Story, when they travelled from Nazareth to Bethlehem. Different Christian groups take part in the parade including Catholics, Orthodox, Anglicans, and Maronites; as well as local Jews.
Christmas is a public holiday in towns like Nazareth where there are lots of Christians.
The most famous town associated with the Christmas Story is Bethlehem, the town where Jesus was born. It is in the Palestinian Territories and more Christmas celebrations take place there than in much of Israel.
In Hewbrew Happy/Merry Christmas is 'Chag Molad Sameach' (חג מולד שמח) which means 'Happy festival of the Birth'. Happy/Merry Christmas in lots more languages.