It is actually a Pennsylvania term for a small village that is usually placed under the tree. I found an article from the Victoriana Magazine about a Victorian Christmas. Here they mention the origin coming from the Moravians in Germany.
I've also seen other articles mention that the name came about from what the people in the Pennsylvania Dutch area call "putzing around the house." Working on little projects here and there, taking your good old time.
Then when I saw it mentioned that the term "putz" can be offensive to some cultures.
Ut oh. Maybe it's best if I just call them "glitter" houses!
Still, they're awfully cute.