There are very few festivals held in Japan in December, if you count out the Christmas shopping decorations and city light-ups. One remarkable exception is On Matsuri in Nara.
Held every year for almost 900 years, the festival is a peculiar storehouse for old customs and traditions. It is one of a few places where you can see the old forms of art like dengaku or sarugaku – predecessor of noh theater.
On Matsuri lasts four days, but most important and public celebrations take place on December 17th. At noon a parade from Kofukuji Temple moves to o-tabisho.
It is definitely worth to come before the parade starts to mingle with participants waiting for start.
There are two places where there are paid seats: near the torii gate to Kasuga Taisha and in front of the o-tabisho. The first place is completely not worth money. The second, depends on your interests (the old dances are rather long and there are people who don’t like the music), weather (December is cold and sitting in one place for a few hours is demanding, but you can leave and enter the stands), and Japanese language understanding (you will get an audio guide with detailed explanation of the dances).