Xmas is All About Christ
The third century Church used the Greek Letters Chi ("X") and Rho ("P") – the first two letters in the Greek speaking of the word "Christ," and sometimes "X" by itself to represent Christ. In religious art of the Renaissance and Medieval periods it was quite common to see these intertwined letters "X" and "P" in paintings of Christ. It is believed that this is the origin of the use of the letter "X" in "Xmas."
Online encyclopedia articles explain more:
The word "Christ" and its compounds, including "Christmas," have been abbreviated in English for at least the past 1,000 years... "Christ" was often written as "XP" or "Xt"... This X and P arose as the uppercase forms of the Greek letters χ and ρ used in ancient abbreviations for Χριστος (Greek for "Christ"), and are still widely seen in many Eastern Orthodox icons depicting Jesus Christ. The labarum, an amalgamation of the two Greek letters, is a symbol often used to represent Christ in Catholic, Protestant, and Orthodox Christian Churches.
The Oxford English Dictionary (OED) and the OED Supplement have cited usages of "X" or "XP" for "Christ" as early as 1485. The terms "Xpian" and "Xtian" have also been used for "Christian." The dictionary further cites usage of "Xtianity" for "Christianity" from 1634. According to Merriam-Webster's Dictionary of English Usage, most of the evidence for these words comes from "educated Englishmen who knew their Greek."
The historical use of "Xmas" then seems to have been to represent and even recognize Christ as the focal point of Christmas – since anyone who would have used the term "Xmas" would have known Greek and known the "X" was for "Christ," not a secular replacement for Him. So the "X" in "Xmas" was not an attempt to take Christ out of "Christmas," but simply another way of honoring and recognizing Him. The challenge, however, comes in these modern days when the term "Xmas" is still used even though not everyone is aware of the Greek roots of the usage of "X, "XP," and "Xt" to represent "Christ."