Drama Story
Drama-Story is simply acting out a biblical story. The typical Christmas drama is an elaborate version; the more typical approach would be to read the story, omitting difficult parts. Then, with the adult initially providing the narration and perhaps a second adult acting one of the parts with the children taking other parts, the story is enacted. After the first enactment, children change roles, and the story is acted once again.
The greatest value of this approach is that children become part of the story because they are acting out their part. They begin to see alternative perspectives within the story as well. Thus it is likely their own understanding of the story will deepen, even as they are increasingly able to recall the details.
There are a number of research studies that relate to this approach--see Donald Ratcliff, "Stories, Enactment, and Play" in Handbook of Preschool Religious Education (Religious Education Press, 1988).