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Don we now our gay apparel
This basically means "Let's put on our happy clothes". In that time, people usually wore boring clothes that were colored gray, brown, and black. However, during Christmas, they tended to go for something a little more colorful. As in red and green. Don means put on, gay in that time meant happy, and apparel means clothes. So, in conclusion, "Don we now our gay apparel" means "We put on our happy clothes". Though it is a bit awkwardly worded, as Meggies said, words at that time became altered as America got older.