We call it our "Shepherds' Meal" and we have a very simple dinner - soup in bread bowls and sparkling cider (the only occasion in my life that there is actually enough sparkling cider to drink as much as you want). We sit on the floor near the fireplace. We wear various costumes, mainly of the bathrobe and towel variety, although my Aunt Miriam really helped us step it up a few years ago with a large box of Biblical costumes.
Afterward, we recite the Christmas story from Luke (years ago, my parents assigned each of us a verse or two and we memorized them. Even now, only doing it once a year, we can recite our parts without mistakes on that evening).
This has been a terrific part of our Christmas celebrations for all these years. It is a low-stress, low-preparation meal, it's quiet and low-key at the end of the day, and it focuses on the birth of the Savior, and away from the frenzy of gift anticipation and Santa and the other fun, but ultimately non-central parts of Christmas, which sometimes can become just overwhelming, especially for kids, on Christmas Eve.
It's a tradition that I love, and one that Bart and I plan to carry on with our own children someday.