This is easy. All through my childhood my father would stay up late on Christmas Eve arranging an entire landscape under the tree. It started with something called the In-A-Barn Farm that my grandfather made himself. At least I think he did. Maybe it was a kit or project from a woodworking magazine. All the farm buildings and the farmhouse fit down inside the barn for storage (the roof was the lid) and there were outbuildings, a well, and fences (both metal to look like stone and wooden ones)—literally everything you'd find on a farm.
Dad would lay out white batting for snow and sprinkle brown dust for the pathways and animal enclosures. There were tiny people positioned on the walkway up to the house and farm animals in their pens and the barnyard. The animals and people were made of metal and were painted very realistically. In the back near the wall behind the tree he'd form hills from crumpled brown paper and position those little green bottle brush trees. There were even a few Indians hiding back there. Watch out farm family!
These pictures are scanned from the original slides which are about 40 years old, so not so great. But you can click on this one and go to my Flickr page for a larger version. If you look closely on the path outside the barnyard there's a farm hand chasing three geese.
In the evenings we'd turn off the room lights and plug in the tiny lights inside the house and barn and it was like magic. Sometimes, after we'd gone to bed, Dad would move the people and animals around, and we were convinced that they moved by themselves during the night. We also had these really creepy-looking elves that would move during the night, too but that's a story for another time :)
That's my memory, and thank you all for sharing yours. I couldn't really choose a winner based on how good your memories are (they're all good), so I threw all the names in a hat and the winner is Amy (the Christmas Eve pizza-eating one). Send me an email at firstname.lastname@example.org and let me know how to get your sachet to you.