If you’re looking for an O scale Christmas village or O scale holiday village to go with a Lionel train or similar train of another make, you’re in luck. You have two good choices.
The biggest names in Christmas villages are Department 56 and Lemax. I’ve compared and contrasted them here. Both are close enough to O scale that they look good with O scale trains. The buildings are really closer to 1:55 scale, but that makes the layout look a bit larger than it really is, since the buildings are a little on the small side.
Both Department 56 and Lemax figures are much closer to G scale than O scale. Some people don’t mind and use the figures anyway. If you don’t want giants roaming around a lilliputian village, you have two options. You can use O scale figures from companies like Arttista and Woodland Scenics. Both have a large selection of well-crafted figures.
For an affordable option, get Cobblestone Corners figures from Dollar Tree. Cobblestone Corners figures are very close to O scale. They’re also cheap. For a dollar, you get a package with several figures in it. The quality isn’t on the level of Woodland Scenics or Arttista, but they are better than many of the cheaper O scale figures.