I really have no idea what the kids' play is supposed to be - you assume it's the story of Jesus Christ's birth, but there's no Joseph, Mary, or Jesus - there's an innkeeper (Pigpen), a shepherd (Linus), and animals (all of which are supposed to be played by Snoopy, including a penguin). After that, things get confusing - Lucy is playing "The Christmas Queen", whatever that means (I guess Mary?). Also, since Linus gives his speech about Christmas after Charlie Brown tries to direct the kids, I guess Charlie Brown doesn't know the story of the first Christmas?
It makes pretty much zero sense, but at least it's an excuse to see the kids go hogwild dancing. Seriously, their weird dancing is just the best thing ever.
They should be using their warlock powers to, I dunno - clean Pigpen? Cure world hunger? Make their parents reappear? Or maybe it's the childrens' unholy magical powers that disappeared all of their parents in the first place - sort of like that Twilight Zone episode where the little kid sent people he didn't like "to the cornfield." Maybe the reason none of the adults can speak in any tone except trombone-esque "wahhhh"s is because of a curse placed on them by some unruly kids? HOLY SHIT MAYBE THEY GOT THEIR POWERS FROM THE GREAT PUMPKIN???
If you watch A Charlie Brown Christmas on ABC or Hulu nowadays, you may notice something pretty crazy - a few scenes you remember from previous airings are now missing entirely, primarily Sally writing a letter to Santa Claus with her demands and Schroeder trying to play Jingle Bells at Lucy's repeated request. But why would you cut these (very funny) scenes from an already short program? To make room for more commercials...in the special about how Christmas has become too commercialized.
Also, if you're watching on Hulu, HOW THE HELL DOES HULU GET AWAY WITH HAVING THIS MANY COMMERCIALS? #Netflix4Life
Sidenote: Here's Sally's letter to Santa, and here's Schroeder and Lucy working on Jingle Bells. Fuck you, ABC.