We're done a few Christmas trips. Only one of them included actual Christmas Day. Two have included Christmas Eve. I've been the leader of multi-family trips, multi-generation trips, and children-bring-a-friend trips.
It's hard to actually list pros and cons because your family and your experience will be unique to you. So I will list what worked for us and didn't work for us and why I think it did(not) work.
I prefer to drive because I like my packing options and getting around outside WDW options. Note that we have food allergies, so the ability to have grocery staples with which we are comfortable is important to us.
I prefer to have extended family time separate from park time because tastes and abilities vary so widely among us. I want to maximize family time with extended family and I want to maximize park time at the parks - diverse attraction and food tastes prevent the two being combined.
Some of us naturally walk faster and are actually uncomfortable plodding along. Larger groups and larger crowds require a slower pace. If absolutely everyone in your crew is comfortable moving slowly in large crowds and adjusting pace to the slowest member, then you'll do fine.
Christmas crowds, even the week before Christmas, require you to realize you will see many many less attractions - getting everywhere, even through the bathroom, will take much longer than you expect. Seriously, expect to get half of a regular trip done.
Table service reservations are a quicker meal that counter service when the parks are crowded, but require your crew to want to eat at the same location and time. Liberty Tree Tavern had a turkey and dressing meal (year round) that matched our idea of Christmas, we also requested to be seated near the snow-fall view within Be our Guest and ordered not much because we had a later dessert party. In Epcot, the holiday food booths are festive for snacks if you find shorter lines or have someone in line while everyone else listens to a nearby storyteller. The German TS restaurant has live music that includes holiday tunes during the holidays. FYI reservations are harder to get in Epcot because so many of them are set aside as Candlelight Processional packages.
If moseying around the decorations in resorts, parks, and Disney Springs with your family is your primary goal, you will have an awesome time.
We, as others have mentioned, declared the trip to be Christmas with few other gifts - one easy to transport gift to open at WDW on Christmas, a souvenir budget, and the couple gifts to open when we got home. Note we don't normally have a souvenir budget - you buy what you can afford to buy with your own money on a non-Christmas trip, so a souvenir budget was a gift.
We have decorated two different rooms for Christmas in different years. We bought pack-flat garlands and a few lighted decorations. We also had clings and magnetic decorations - also mostly flat for packing. We found spiral trees that are basically flat until you extend them up into trees. If you are handy with ribbon, you can take large ribbon off of the spool and pack it small to wrap your door in a fantastic fluffy bow when you arrive. We bought one of the Disney gingerbread house/carousel/whatever kits and put it together at the beginning of the trip, we had a hands-off policy for a couple days to admire our creation, then it was munch away.
Christmas in the park strategy for us was locked-down uber-planned. We had 2-3 table service/party reservations in the park on Christmas Eve and Christmas Day to ensure us a reserved spot to escape crowds and to be fed and to use a bathroom without insane CS or bathroom waits. IDK if they'll have FPs again this year (I hope so, but don't count on it) but we also planned mornings without FPs and afternoons with FPs when lines are usually longer - we did not leave the parks for fear of them reaching capacity. At least one of our FPs was for the Christmas Parade and we also had Fireworks Dessert Party to guarantee a spot for that. We love the storytellers at Epcot so that was where we spent Christmas Day - again with the same FP and Table Service plan. We did not do the Candlelight Processional dining package because we had seen it repeatedly in years past and we were only the immediate family that year. Instead we staked out a table across the walkway from CP and ordered CS in the American Pavilion so we could listen to the CP as we enjoyed our meal. We could NOT see the CP - people will stand at the back of CP, so don't count on having a view, but we could hear it and that was fine with us. The CP package has been worth it for us in the past for guaranteed seating, but it is still first-come first-served within that "reserved" area, so requires you to spend an hour in line to get a good seat. YMMV.
This year we have reservations but are leaving WDW the week before Christmas - college children have different schedules now. I'm grateful that I won't get there at the height of the crowds, don't have to worry about transporting presents or in-room decorations. Whether FPs or not, we still plan to make dining reservations to ensure a comfortable scheduled spot to eat every day in the park. Park reservations causes this to be a bit less flexible than in years past. Current reservations open for everyone at 60 days unless things change between now and December - this will also make getting reservations more difficult, so have a plan and make those rezzies ASAP. You will also have the lack of flexibility that comes with having to accommodate a large group. Disney is magical with holiday decorations and shows - if you realize you'll see and do much less, set some group ground-rules, and have similar tastes among your group - you will have an awesome Christmas to remember!
