When George Balanchine was devising his production of “The Nutcracker” and costs were spiraling upward, he was asked if the expensive tree – that magical Tannenbaum that grows to Rockefeller Center proportions – could be eliminated. His reply: “No, the ballet is the tree.”

For the past half century of holiday seasons, night after night, when that modest sized Christmas tree expands upward toward the rafters, there’s a swell of enthusiasm throughout the house. The gasping audience – eyes glued – can’t help but applaud. Even the orchestra has a little fun: I once caught the cellist clapping and smiling at what was happening above the pit.

This is one of those moments when even the most jaded viewer remembers why the New York City Ballet’s Christmas classic is worth seeing year after year. And with Balanchine’s company celebrating its 50th year of dancing ‘The Nutcracker,” it’s worth pausing to consider what makes this ballet one of the greats.

Though Balanchine turned out to be right about his insistence on the tree (and the ballet), it was all quite a risk at the time. “The Nutcracker” was the fledgling company’s first full-length ballet – as well as its most expensive. After giving audiences abstract, Modern masterpieces, Balanchine was switching gears by serving up a sweet-natured narrative ballet that put hearth, home, and family onstage.

Balanchine introduced his version of “The Nutcracker” in 1954, but he was not the first to make a full-length version in this country. That distinction belongs to William Christensen, who in 1944 put up the work for the San Francisco Ballet. In the book “Nutcracker Nation” – describing the ballet’s history in the United States – Jennifer Fisher notes that Christensen consulted Balanchine before staging the ballet.

Balanchine was an authority on the subject. In 1919, he had himself danced in Lev Ivanov’s original production, which premiered in 1892 in St. Petersburg, Russia. As a young man of 15, Balanchine had danced the role of the Nutcracker Prince, and he remembered the experience fondly. As he said in “101 Stories of the Great Ballets”: “I have liked this ballet from the first time I danced it as a boy, when I did small roles in the Maryinsky theater production.”

But Balanchine’s American version was no simple restaging. He maintained the links to the Russian original, but allowed himself total creative freedom. “I accordingly went back to the original score,” Balanchine wrote, “restored cuts that had been made, and in the development of the story chose to use the original by E.T.A. Hoffman, although keeping to the outlines of the dances as given at the Maryinsky. A prologue was added and the dances restaged.”

Though the ballet has become a Christmas-time tradition, the City Ballet premiere was on February 2, 1954. It was a hit with audiences, if not initially with critics, and has been presented every year since – for a long time in December but now in November as well.

Part of Balanchine’s confidence in putting on a full-length version of such an Old World ballet came from an awareness that audiences were receptive to narrative ballets. Sadler’s Wells had recently come to New York and had successful runs of “Swan Lake” and “Sleeping Beauty.” “The Nutcracker” gave City Ballet a little of that same splash and spectacle, with no less than a full, glorious Tchaikovsky score – even though its repertoire was dominated by leotard ballets set to Stravinsky.

Balanchine’s “Nutcracker” is a smoothly told story based on an ideal of family life in which children take center stage. The ballet opens on a happy note. “There is to be a Christmas party, a family affair for relatives and close friends,” the choreographer explained, “but most of all, for children.”

A bit of young love develops in a slow-motion, dazzled meeting between Marie and Drosselmeyer’s nephew. Then there is a battle royale: the Jerome Robbins-choreographed fight scene between the mice and the toy soldiers.

The second act is a delightful parade of divertissements, ranging from lively items of candy to a grand pas de deux to a cast of thousands (almost) in the Waltz of the Flowers.

The all-too-familiar story can be easily taken for granted. But Balanchine structured “The Nutcracker” so well and loaded it with so many gems that, like all the great ballets, it bears any number of watchings. Almost the entire first act is devoted to the Christmas party at the home of the Stahlbaums, which to the tired eye is just a lot of mime and formality. But look closely and little relationships appear. Every encounter, every interaction has been choreographed to perfection.

Here are loads of (mostly) polite children who shake hands and introduce themselves to one another. They take coats and give them to the maid. What’s more, there are two parents for every youngster. And there are sweet, doddering grandparents. Today this scene seems almost as fantastic and escapist as the trip to the Land of the Sweets.

Pick out a few dancers and watch them as they pass through the larger scene. Whether you’re focusing on the grandparents or a handsome couple or a couple of rambunctious children, you’re sure to catch a little something that you would miss by taking in the whole tableau.

When the curtain opens on Act II, Marie and the Nutcracker Prince have traveled safely to meet the divine Sugarplum Fairy. But first comes a scene that requires detailed artistry from tiny children and a principal ballerina. A series of very young students are dressed as angels. They move with a bent-knee shuffle step – borrowed from traditional Russian dance – that makes them appear to be gliding smoothly across the floor, as if on ice. In comes the Sugarplum Fairy, a pink confection but very much in charge.

This entrance is one of the ballet’s most difficult. Former NYCB principal Merrill Ashley noted that, “It’s your first entrance. You want to look very grand, but the first thing you do is relate to the angels. To be grand and friendly and gentle at the same time is not the easiest thing to do.”

The ballerina must create a mood while also making up for any practical mistakes the very inexperienced dancers sharing the stage with her might make. “The timing of it is difficult because the children are not often aware of when the tempo is fast or slow,” Ms. Ashley said. Watch the ballerina’s adjustment as she gets herself in the right place – and hope those young dancers are watching, too.

It is to the queenly Sugarplum Fairy that the Nutcracker Prince directs his mimed tale of what happened on the eventful Christmas Eve. This portion is arguably the most direct link to the history of this ballet: It was part of the original Ivanov production, and Balanchine himself performed it as a boy.

At City Ballet the mime portion is handed down from generation to generation. The young boy who dances this role is made to learn it very slowly and in detail, according to NYCB’s children’s ballet mistress, Garielle Whittle. “Every single movement has to be taken apart,” Ms. Whittle said. “Where do his hands go? Where do his fingers go? We try to get the movement as clear as possible.”

Act II then proceeds, as a romp through a multicultural candy shop. The highlights are many, but for the classicists, the pas de deux between the Sugarplum Fairy and the cavalier is the pinnacle. Balanchine himself underscored just how important this jewel really is: “The Sugarplum Fairy and her cavalier perform the grandest dance of all, a pas de deux to climax the occasion. This is exactly the kind of dance that Marie would like to do, too, one day, and she and the prince rejoice in the splendid tenderness of the royal couple.”

In fact, it is not the first time that the audience sees “splendid tenderness.” The same feeling is evident between Marie’s parents. And so, in Marie’s dream, the fantasy reflects reality. It brings the dance full circle – even as she and her prince drive off in a sleigh high above the stage.

Marie has indeed been transported – and after two hours of warmth, joy, and a magical candyland, so is the audience. It’s proof positive that 50 years after its debut, “The Nutcracker” remains the most delightful way to usher in winter and a New York Christmas.

‘The Nutcracker’ until January 2, 2005, at the New York State Theater (Lincoln Center, 212-870-5570).