Villages/cities will visually change as holidays based on TES lore come and go. NPCs will also react to these changes by attending various events appropriate for the holiday.
From festive lanterns to fireworks, a list of currently implemented holidays and their basic effects in-game can be found here. You will be given notice of upcoming holidays through flyers from the courier and/or through a monthly events letter at the bar in each city tavern.
A city's/village's NPCs will celebrate in temples, shops, inns and/or outside depending on the holiday. Merchants/laborers may retire early in order to attend events. All cities and villages in Skyrim will have NPCs who celebrate provided the settlement has the specific location required for the holiday (e.g. the Mid Year Celebration has NPCs gathering in temples and outside that day. Since Riverwood does not have a temple, Riverwood's NPCs will only celebrate outside on this holiday).
If starting a new game, you will have the option to manually set or randomize the month, day and/or time your adventure begins and your birthday.