To people our age, learning about traditions and celebrating them are distinct, but kids generally learn by doing. I think it would be odd for a teacher to say "Okay class, I'm going to play a record of Christmas and Hannukah music for you so you can learn it, but you can't sing along because that would be celebrating traditions you don't believe in." Kids are just learning meanings, not expressing belief, y'know? And I think that as long as the children aren't being taught that Christmas is the one true winter holiday, or schools appear in their own celebrations to be favoring Christmas over the others, then it's ok.

To me, separation of church and state doesn't mean state-sponsored institutions try to pretend religion doesn't exist, just that they don't play favorites. I guess that's the fundamental basis for my perspective.