Elf on the Shelf is a popular Christmas tradition where a special elf figurine is placed in the home during the holidays to observe and report back to Santa about the children's behavior. The idea is that the elf can move around the house and even get into mischief, but he's always watching. It's a way to encourage children to be on their best behavior during the holiday season, as the elf will report back to Santa whether they've been good or naughty.