At her age you can't explain it in great detail. The story of how Christmas developed is actually very interesting but it would bore a 5 year old.
But you could hit the highlights. Thousands of years ago people discovered that days get shorter and shorter in the Winter. Then, at a particular time, the days begin getting longer again. You might be able to explain this with drawings of the earth going around the sun, tilted on its axis. But even that might be a bit much for someone that young.
So anyway, thousands of years ago people didn't know what to make of this. They didn't really know what to believe, so they made stuff up. For instance some of them made up stories about a space monster taking the sun away, and a heroic 'man in the sky' fighting the monster and getting the sun back. (There actually were myths like this!) These stories are called 'myths', and people didn't really BELIEVE them but they served to explain why the world was the way it was.
In some cultures they had group of men in charge of making up these myths and teaching them to everyone. These guys had time to 'observe' nature and the skies. And before long they learned to figure out, ahead of time, the exact day the days would start getting longer. Of course everyone in the society wanted to know that! So these men would hold some kind of ceremony just on that day. And the days began getting longer, and it warmed up, and farmers' crops began to grow. People came to look forward to that day! When we have Winter now, we can look at a calendar and say 'It will start getting warmer in 2 months.' But in those days they didn't even have calendars so people didn't know WHEN it would get warmer. Maybe it never would!
Well, think of these guys holding this ceremony for years and years. After a while, people came to think that it was the ceremony itself that led to the days getting longer! Of course this was 'job security' for the priesthood that performed the ceremony. 8^)
So now thousands of years later, but still thousands of years ago, the Roman Empire changed from Paganism, which believed in many gods, to Christianity, which believed in one God. This is why Christianity is prevalent still today in the Western World. The early Christians wanted to stop the celebration of this Pagan holiday But it was just SO popular that they couldn't stop people from celebrating it. In the Pagan world it was the biggest holiday of the year, and people didn't want to give it up! So eventually, Christians decided that Jesus was born at that time, and that would allow people to still celebrate it without being 'pagan'.
So now to this very day, Christmas time is a time in the dead of Winter when you can't do a lot of other things. So people put up lights, they visit one another for dinner, special movies come out this time of year, and kids look forward to it because they get a week off school. Christians say it's all about Jesus, but he wasn't even really born in December, it was just an excuse all along to celebrate at this time of year. But you don't even have to be Christian to celebrate the Winter Solstice. We call it 'Christmas' but for many people, maybe even MOST people, it has nothing to do with religion.