It is no secret to anyone who knows me here on the DIS that the holidays are my absolute favorite time to be at DLR - that time surpasses all other times of year at DLR for me, whether it is crowded or not! You will have a fantastic time. I think everyone who has experienced DLR during the holidays will agree to the fact that it is 100 times more magical than it is during the rest of the year, if that's possible!
Not only are all three hotels decked out, as the previous posters have told you, but every corner of the parks themselves is really done up in holiday splendor. The attenttion to detail and the hours and effort put into this yearly endeavor boggles the mind. The whole resort (including DTD too) is totally immersed in the season. Everyone is in festive spirits. Every restaurant and shop you go into will be decorated. The Winter Castle glows almost incandescently throughout DL. The lights on Main Street and the fake snow are glorious. Everywhere you go there is holiday music, holiday food, holiday lights, holiday merchandise, carolers, Santa, the smells of peppermint and cinnamon and gingerbread... don't miss getting a few delicious gingerbread man cookies with mouse ears! Yum! I saw a segment about DLR during the holidays on one of my local news channels last year, and they were giving stats on exactly how much garland is used, how many lights are used on IASW Holiday (don't miss that!), and how many Christmas trees are put up for the holiday season. There are 700 trees - from miniature to gigantic - put up throughout the entire DLR, and that incudes in the shops, in the restaurants, in some window displays, in Santa's Reindeer Round-Up, in the hotels (I actually saw more than one Christmas tree in the GCH last year, but the GCH lobby is a great place to go to relax by the fireplace or next to the huge tree and listen to the carolers and the piano & guitar players playing Christmas songs), in DTD and in the parks. In ToonTown, there is a special ToonTown city tree, but Mickey and Minnie also have their own special mini trees. A Bug's Land is decorated with gigantic lights and ornaments. Even Goofy's Kitchen has its own zany tree outside of the restaurant.
But beware - because once you go to DLR one time during the holidays, you may fnd yourself wanting to go back every year during that time!