Saturnalia (from the god Saturn) was the name the Romans gave to their festival marking the Winter Solstice. Over the years, it long-drawn-out to a whole week, the 17 December to 23 December. It also degenerated from more often than not tomfoolery, marked chiefly by having masters and slaves button places, to sometimes debauchery, so that among Christians the (lower case) word "saturnalia" came to mean "orgy".
It was traditional for Romans to swap gifts during this holiday. These gifts were usually made of silver, although nearly anything could be given as a gift for the occasion. More than a few epigrams by the poet Martial survive seemingly crafted as riddling gift-tags for gifts of food.
The customary salutation for the occasion is "Io, Saturnalia!" — Io (pronounced "yo") being a Latin interjection related to "ho" (as in "Ho, praise to Saturn").
It has been postulated that Christians in the fourth century assigned December 25th as Christ's birthday (and thus Christmas) because pagans previously observed this day as a holiday. This would sidestep the problem of eliminating an already well-liked holiday while Christianizing the population. The medieval celebration of the Feast of Fools was another continuance of Saturnalia into the Christian era.
Seneca the younger wrote about Rome during Saturnalia approximately AD 50:
It is now the month of December, when the most part of the city is in a bustle. Loose reins are given to public dissipation; everywhere you may hear the sound of great arrangements, as if there were some real difference between the days loyal to Saturn and those for transacting business....Were you here, I would willingly award with you as to the plan of our behavior; whether we should eve in our usual way, or, to avoid singularity, both take a better supper and fling off the toga. — From Epistulae morales ad Lucilium