This is one of Santa's workshops.  Unfortunately, I have been sworn to secrecy, by the elves, and can only tell you that it is located in the north-east. Inside the workshop there are many toys, cookies, candies, a gum-drop tree and a train that runs along a wooden track, just below ceiling height.

While the workshop may look small, I believe it has the same magic as Santa's bag, where it can hold unlimited amounts of Christmas presents and Spirit for all to enjoy.