For our son's first Christmas, my life long friend made him a cake plate that reads," Happy Birthday Jesus!" Each year we bake cupcakes or a cake with candles and whatever decorations the kids come up with to celebrate Jesus's birthday!
One year, while the kids were all preschoolers, we invited little friends over. They baked, decorated, and delivered cupcakes to our neighbors (which were so heavily decorated they were probably not suitable for consumption.) The kids ran through the neighborhood so proud and told our neighbors, "Merry Christmas and Happy Birthday Jesus!"