While Clara is sleeping, Santa's sleigh falls off of her roof. They're a little shocked to be seen. After Santa chuckles a bit, assures Clara they're just normal roof people doing roof things. He realizes he's been noticed and then they have a chat about Santa, believing in him and fairytales.
The Doctor arrives and orders Clara into the TARDIS. The Doctor knows what is up, but Santa assures him he doesn't, and he'll need his help before the day is up.
Clara is so happy to be back and cannot believe how much she missed the sound of the TARDIS. Does she really believe in Santa Clause? Right now, yeah. She thinks she does.
Some people are at what looks like the North Pole. A woman named Shona is going into a room with others chattering in ear. She hears Merry Xmas Everybody by Slade and starts dancing. It's working until she sees The Doctor and Clara walking in... the space crabs or something. If you think about them they come for you. While The Doctor is trying to get Clara to think of something good, he mentions Danny and Clara tells him Danny Pink is dead. The Doctor is incredibly shocked.
They're all saved when Santa rides in on Rudolph. Yep, Rudolph is real. Santa uses a keyfob to turn off his nose. He tells the sleepyheads (crabs) to go back to bed. As The Doctor and Santa start sparring, one of the elves picks up a balloon animal and holds it at The Doctor. Shona will "mark" Santa is he pulls out words like "My Little Pony" again.
Santa gives his elves a verbal warning to shut up after he goes "badass." Shona tries to find out why Santa is there and the discussion of the North Pole being a real pole and still stripey commences.
Apparently, it's all a dream. None of them know if what they're experiencing is real or an illusion -- a dream.
The Doctor and Clara both admit their lies to one another, both for the better of the other, or so they thought.
Santa compares his sleigh to the TARDIS and his elves give him props for it. The guy eating chicken thinks the dream crabs are like face huggers from Alien. The Doctor can't believe how offensive Alien is as concept.
When Clara is under attack from a dream crab, she starts thinking about Danny Pink. The crab dribbles stuff onto her and she wakes in her bed. Danny wakes her for Christmas. She's in the state the crabs lead you to while you rot and die.
The Doctor is reaching to find Clara with a blackboard in her dreams. Or is it Danny? She's dying and even when The Doctor reaches her (how? because he's dying, too) she has a hard time letting go of the image of Danny.
Danny tells Clara she can remember him for five minutes a day, but the rest of the time she must carry on with life, for him.
Only after The Doctor and Clara wake up do they realize they are all still asleep. Because Santa was the person to rescue them.
Santa heads in to tell them he's there as a dream who is trying to save them. The dream protects itself and keeps you from asking the right questions. That's why they all say "It's a long story," to various answers.
It's dreams within dreams. As they all run and struggle against what's happening to them, one seems to die. The dream crabs have them all in various locations around the world and they're networked together. The dream crabs start coming toward the screens to drag them away. There are so many of them but using their imagination to dream themselves home doesn't seem all that easy.
Then, realizing it's Christmas, they use Santa to dream themselves home.
The Doctor takes the reins from Santa and he's so ridiculously happy it's impossible not to laugh and cry at the same time and they all blow over London.
Shona wants to swap numbers so they can have a reunion and find each other again. The first woman wakes up, in a wheelchair. There is a crushed dream crab beside her.
Ashley wakes up in bed as a dream crab blows up on her pillow next to her bed.
Shona is worried about waking up. When she does she's in a tiny, messy apartment. She looks at her Christmas list. On it is watching Alien, a Thrones marathon and more.
Clara kind of wants to stay even if it means she dies. The Doctor leaves the sleigh first and jumps headlong into the TARDIS. Clara wants to wait just a little longer. it's as if she wants to wait out her life so she doesn't have to live without Danny.
The Doctor shows up at Clara's house and takes the crab off of her face. It's been about 62 years since she last saw him. She has missed him very much, the stupid old man. He brings in a couple of Christmas hats and Clara looks young to The Doctor again. She never married. She traveled and taught in every country in Europe. Learned to fly a plane. She has hundreds of regrets. They pull a Christmas cracker.
When The Doctor wishes he had come back a lot earlier, Santa shows up. He's not awake after all. He rushes to Clara. She doesn't know if she's young, because he always sees her the same.