1. A visit to Celebration, FL- Celebration is fun to walk around regardless of the time of year you visit. During the holidays, however, they offer a special event called Now Snowing Nightly. In the evenings every hour there is a "snowfall" on the Main Street. My daughter loves playing in it! You can also visit with Santa and Mrs Claus and drive through the neighborhoods to see some amazing lights. All of these things are free and enough to keep my daughter entertained for an evening. If you want to spend some money they also have horse and carriage rides, a train ride, and a small ice skating rink. We pack our own snacks but there are several kid friendly restaurants you can have dinner at as well as an ice cream shop for dessert. Parking is free on the side streets, so you can make this a totally free evening.
2. Santa's Favorite Resort- On select dates in December Santa and Mrs.Claus come to visit what they call their favorite resort, the Swan and Dolphin hotels. Because it is their "favorite resort" Santa dresses in his tropical beach attire and has a little beach shack set up for photos. You can take as many photos as you want with your own camera for free. Santa usually appears around 6:15 but before that there are other activities like Mrs. Claus reading a story and lighting the tree and free cookie decorating for the kids. There is also an awesome display of a huge chocolate Santa Claus that smells delicious. If you get there during the daylight hours the Swan and Dolphin have a really nice playground my daughter loves. Parking is expensive at the Swan and Dolphin but Disney's Boardwalk has a free lot the public can use and we stroll over from there. As an added bonus the Boardwalk is beautifully decorated and often has holiday entertainment going on outside on the boardwalk or near their Christmas tree. The night we were there this year they were showing a holiday movie so we grabbed a treat at the Boardwalk Bakery and stayed to enjoy it!
3. Bass Pro Shop- Bass Pro Shop is one of the few places in Orlando that offers free photos with Santa. You get one free print from their photographer but you may also take as many as you'd like with your own camera. In addition to Santa they have other free entertainment and activities. My 3.5 yr old's daughter's favorite is the carousel with the reindeer, polar bears, and other winter animals on it. She always asks to ride it several times. They also have games older kids can play as well as a coloring/letter writing to Santa table and free crafts at select times. I highly recommend going on a weekday evening with preschool age and up if you can because they usually have all the activities going on at that time but it is a lot less crowded than the weekends. For toddlers and younger who would just enjoy visiting Santa, coloring, and riding the carousel, anytime on a weekday would be fine.
4. Tour the Disney Hotels and Fort Wilderness Campground-It costs money to visit the Disney Parks but anybody can park at and visit the Disney hotels for free. (Note:If you go the week right before or after Christmas they may not let you park in the hotel parking lot. Contemporary Hotel and Polynesian limit parking a lot more but you can always park free at Downtown Disney and ride a bus to your destination if this is the case.) During the holiday season the deluxe hotels are beautifully decorated. All have themed Christmas trees and many have gingerbread displays. The Grand Floridian Hotel has a huge gingerbread house that actually operates as a store where you can buy gingerbread and other sweet products. Sometimes they have a Cast Member standing in front of the gingerbread house talking about how it is made and making a mini gingerbread house. If you are lucky enough to catch this they often give out free samples of gingerbread afterwards. We usually take a few different days to visit different hotels (ie one day all the ones on the monorail loop, another day all the ones around the Boardwalk). Animal Kingdom Lodge is a bit of a drive from the other hotels but it is beautifully decorated, has a great playground for the kids, and plenty of animals to see. One of my favorites to visit, however, is Fort Wilderness Camground. Start when it's still light out and let the kids play on the playground and do the $5 pony ride. After dark it's fun to wander through the campsites because the campers decorate very elaborately. There is an inexpensive hay ride (first come, first served) or more expensive carriage/sleigh ride (reservations recommended), but I prefer to walk because I think you see more and can go at your own pace. We finish up at the free Chip and Dale campfire sing-a-long and movie. Bring your own materials for toasting marshmallows to make s'mores or you can buy them at the chuckwagon. 
5. View the Christmas Lights Displays-During the Christmas season there are many neighborhoods and houses throughout Orlando that have very elaborate light displays. We love to grab some snacks and drinks, hop in the car, and drive around to view them. Radio and TV stations often have lists of the most elaborately decorated houses/neighborhoods on their websites. One of our favorites close to our house is Christmas in the Shire, which is a house that is not only decorated with tons of lights on the outside, but filled on the inside with many different themed trees and free and open to the public during certain hours. You can also seek out larger public displays. Some of the favorites we visited this year were the Holyland Experience (free on certain nights) and Light Up Moss Park ($5/car to drive through as many times as you'd like on select dates). Light up UCF is another free local lights display (activities like ice skating and an ice slide available for additional fees but they also usually show a free family friendly holiday movie nightly).
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