Ulrike knows all about the Winter Solstice celebrations of the giants, being one himself. But what he doesn't know is why the humans cut down whole trees, only to take them home to decorate. Other giants tell him to forget about it, but Ulrike is curious; he needs to know why they do it.
Finally, when he's puzzled over it so much his head is sore from all the thinking, he decides that this is the year he'll figure it out, and risks a return trip to the home of the last family he watched to look for clues, despite almost being spotted last time he was there.
That's how he meets Billy, a friendly little boy who loves stories, and is happy to tell Ulrike all about tree decorating, and Santa Claus, along with a couple of stories he knows about them. Stories which Ulrike loves, and which inspire him to add some of what Billy says are Christmas celebrations to his own this Winter, in the hopes that Santa Claus will visit him too.