Basically you take a photo, or load one from your camera roll, and the app enables you to add holiday elements to your photos. You can dress someone in a Santa suit and beard, or add hats, candy, snowflakes, etc. to create a nice personalized holiday photo. The free version gets you 21 graphics to add, and there are two additional packs at US$0.99, each with more holiday symbols.
Using the app is like others of its kind: Select your photo, select one or multiple elements to add, click on them to rotate and resize them so you can get that hat or Santa suit perfectly scaled to your subject.
It's great for kids, or anyone who wants to create a holiday photo that can then be forwarded to friends and family.
Xmas Camera now requires iOS 7, and it's optimized for the iPhone 5. The app is not universal, but should be as the iPad camera is getting increasingly popular. I think the app will generate some fun and some laughs for the holiday season.