It is a midquel that takes place within the timeline of the original Beauty and the Beast (after the fight with the wolves, before the Beast gives Belle the castello library, and before the fight with Gaston).
In this movie the Beast forbids Natale (because his transformation from the Prince occurred on Christmas) until Belle, Cogsworth, Lumiere, Mrs. Potts, and Chip convince him that Natale is a good holiday.
The film also shows the time that the enchantress put the spell on the castello in the first film in più detail.