Before Christianity came to Britain people used to decorate their houses with evergreens, including holly as part of their winter celebrations.
The Romans celebrated Saturnalia in mid-winter. People would send each other boughs of holly just like we send Christmas cards.
Ancient druids used to decorate their homes with branches of evergreen leaves so that the "little people" who lived in the trees could share in the winter celebrations. That's one of the reasons why people have fairies on the top of their Christmas trees.
When Britain converted to Christianity some of the old traditions carried on, this time to celebrate the Christmas festival.
In the old days you didn't put up your evergreen decorations until Christmas Eve and you couldn't take them down again until Candlemas Eve (2nd February)!
Books with more information about Christmas traditions.