From the Catholic Educator's Resource Center:
The story of the origin of the Christmas creche rests with the very holy man, St. Francis of Assisi.
In the year 1223, St. Francis, a deacon, was visiting the town of Grecio to celebrate Christmas. Grecio was a small town built on a mountainside overlooking a beautiful valley. The people had cultivated the fertile area with vineyards. St. Francis realized that the chapel of the Franciscan hermitage would be too small to hold the congregation for Midnight Mass. So he found a niche in the rock near the town square and set up the altar. However, this Midnight Mass would be very special, unlike any other Midnight Mass.
The short article ends with: Although the story is long old, the message is clear for us. Our own Nativity scenes which rest under our Christmas trees are a visible reminder of that night when our Savior was born. May we never forget to see in our hearts the little Babe of Bethlehem, who came to save us from sin. We must never forget that the wood of the manger that held Him so securely would one day give way to the wood of the cross. May we too embrace Him with all of our love as did St. Francis. To all of the readers of “Straight Answers,” I wish you a very holy Christmas.