Keep in mind of course the obvious size differences between WDW and the DLR and know that in that light, of course the DLR will not have as many Christmas offerings as WDW in total. Just think about this - the entire DLR (including both parks, DTD and the 3 hotels & parking facilities) could pretty much fit inside Animal Kingdom and it's parking lot. There's just no way to fairly compare the two resorts as one is better than the other as they are both wonderful experiences. By quick comparison - WDW has 4 parks, 2 water parks, multiple golf courses, DTD, 22 hotels & the campgrounds and tons of water and green space; DL has 2 parks, DTD & 3 hotels - you just can't think of them the same way at all. WDW is around twice the size of Manhattan, or about the size of the city of San Francisco... DL can never compare on size, but it CAN compare in quality of offerings and things to do. Having been to resorts both multiple times during the decorated season - as a park - Disneyland is much more beautifully dressed and decked out than the Magic Kingdom ever is. The decorations permeate throughout every land - where they are themed appropriately to the individual needs/themes of those lands.
Remember too that the MK was opened 16 yrs after DL was, and many of the size constraints at DL were modified for the MK. Walkways & sidewalks were made larger, and the whole park was spaced out a bit more. On the most crowded day at the MK, the same attendance at DL would feel a whole heck of a lot worse, simply because the park is not as expansive as the MK is. There are more things to do & see in the single park of DL than at any one park at WDW. But DL does an incredible job of keeping people going and moving with so many rides, shows and other attractions despite the size limitation.
The Candlelight Processional does exist at DL - especially since that's where it started in 1956. It is right in Town Square at DL, with the mass choir standing in front of the train station - but the primary difference between DL's CP and WDW's - is that at DL it only takes place on a single weekend (both Saturday and Sunday evening) vs. Epcot's month-long schedule. SO - as the PP stated that DL does not have it...that could definitely have been true while they were visiting, depending on when they visited in December. It's usually in the 1st or 2nd weekend of the month.
The It's A Small World Holiday version is incredibly themed, and IMO, actually better than the traditional version. This past year was their 13th season for doing this overlay, and it just sparkles! Definitely a must-see.
If you are a fan of Tim Burton's "Nightmare Before Christmas" then you will LOVE the Haunted Mansion Holiday - which runs from Sep. til after New Year's, and is a massive overlay to the classic HM. Only DL and Tokyo DL do this - and it's definitely worth seeing at least once.
Additionally - while WDW does offer the hard-ticketed after-regular hours parties, and you only get to see the Christmas parade if you cough up the extra money to attend one of those parties - at DL, everyone and anyone in the park is able to see the parade if they so choose, as it is included in the regular operating day's admission for everyone. Plus it usually runs twice, afternoon and evening.
The snowfall on Main Street is magical (although it was more magical when we didn't live in an area that gets real snow). The holiday fireworks are wonderful. Wishes is great, but getting tired and needs to be updated. DL refreshes theirs often - having 3 different shows this past year...regular season, and special ones for halloween and Christmas.
The Grand Californian and Downtown Disney are right there nextdoor - and both are incredibly decked out as well. The DL Hotel & Paradise Pier Hotel are both just across the way, and are also well dressed for the season.
DCA this past Christmas did not get as many decorations simply due to the massive construction projects going on through 2012 - but they do have wonderful decorations too. And once construction is complete on World of Color (spring), Little Mermaid (spring 11) and the all new CARSLAND (2012) - the stigma of being a half day park will be long gone. It took the Studios a long time too to be more than just a half day park, and AK barely is that still.
At DLR too - the parks stay open longer than at WDW throughout most of the year. Especially during peak times. DL is open until midnight many, many, many nights of the year, and during the summer they've been known to stay open til 1 or 2 - without any kind of EMH - just open for any guest with a ticket. MK pretty much shuts you out by 8 or 9 if you're lucky. Earlier when they are pushing the various hard-ticketed "after hours" parties.
As far as "other things to do" in Southern California... oh my, a book could be written on that alone. DL / DCA / DTD could easily be enjoyed in 2-3 days, perhaps 4 if you want a more leisurely pace. But Southern California alone could easily add another week and you'd always have something to do. There are miles and miles of beautiful beaches just 15-20 mins. from DL. Hollywood and downtown Los Angeles are are just about 45 mins. northwest. Knott's Berry Farm, Universal Studios Tour,
Legoland, Sea World, Six Flags Magic Mountain, Raging Waters are just a few of the theme park offerings within relatively short driving distance away. There are of course all kinds of sporting events, concerts, museums, aquariums, etc. all nearby. In short - there are so many things to see and do in So. Cal.
If you'd like to see a sample of some of the various Christmas decorations and such - check out my Solo DL TR Nov/Dec '09 below in my signature. I bookended a work trip (my company is based in Irvine, CA - just moments from DL) and stayed at both the Paradise Pier Hotel and the VGC... it was tremendous. And you just can't beat the exclusive access into DCA directly from the Grand Cal!