Yes, they know it's Christmas. The children know that it's Christmas because they can see the Christmas decorations on the houses, the Christmas trees in the windows, and they can hear the Christmas songs being played in the stores. They also know that it's Christmas because they can feel the Christmas spirit in the air, which is a feeling of joy and excitement. The children also know that it's Christmas because they can see the snow falling, which is a sign that Christmas is near.