While I had heard of kissing under the mistletoe, I hadn't really ever seen any until I moved with my family to South Carolina. There it grows in abundance in the trees, and I learned how it is a parasite that leaches life out of some trees enough to kill them. My brothers would go out with their 22 pistols and aim for their bases to make them fall out of the trees. It was a really fun gift to bring back to family in Utah! I can understand how mistletoe was a plant associated with winter. It doesn't show up much during the other months, but as an evergreen, it really stands out in the winter, making an otherwise dead-looking tree look vibrant and alive. Mistletoe only grows on host trees, and it spread through seeds spread by bird poop. In fact, the etymology comes from the Anglo-Saxons' word for dung ("mistle") and twig ("tan"). It's a twig that grows out of bird droppings. In time "misteltan" evolved into "mistletoe". How delightful!
But it's not all bad. As this researcher found, mistletoe plays a very important role in the ecosystems it plays a part in. So don't let it's parasitic nature stop you from any nostalgic endearment your favorite Christmas Carols may have taught you.
I know that the story of the Norse god Baldur is far better known now than it was even 10 years ago, but in a nutshell, Baldur was beautiful and loved by all the Aesir. When dark signs of his premature death threatened his life, his mother Frigg, wife of Odin, asked the living and non-living things of the earth to promise not to hurt him. But mistletoe, being a parasite, is not a living thing of the earth since doesn't grow from the ground, and Frigg overlooked it. Loki saw this as an opportunity, tricked the blind god Hodr into killing Baldur with an arrow poisoned with mistletoe. It killed him and the gods mourned.
While Loki was punished, and there is a bit more to the story, in the end it is the fate of mistletoe that we are most concerned about here. Frigg forgave the mistletoe, and declared that instead of anger and meaningless death, mistletoe would henceforth be a symbol of peace. Her pearly tears became mistletoe's white berries. As such, Nordic people would decorate their homes with it in the winter, especially for large assemblies. In peace gatherings, warriors would disarm and place their weapons under it as a symbol of their intentions for peace. If there were neighbors fighting who found themselves battling under mistletoe, they would put off their quarrels, although it was often only temporary. Old friends would embrace under it and kiss each other, usually only in a platonic way.
Ah, but a good tradition like that isn't going to be wasted for very long when it could be put to better use, is it? A coy young man in 18th century England used it as an excuse to kiss a young woman, and it worked. Before long the story spread and it became a popular tradition. Mistletoe was already a popular decoration during the holidays, so it was a convenient excuse to get some playful action with a potential sweetheart.
Mistletoe is poisonous, but also has medicinal properties. Some researchers think it has anti-cancer properties, although it is not approved for such use here in the US. Mistletoe is a fertility herb because it makes trees appear alive, even in the cold of winter. The berries' sticky appearance and texture resembles semen, so there has been an association there as well.
While there are other Pagan associations for mistletoe, I think Baldur's demise and Frigg's compassion is the most notable in our search for Christmas history associations. As an evergreen it was used to decorate during Saturnalia, and there are some legends that say that druids would harvest it on the winter solstice or something like that, although these traditions are likely more myth than fact. It's fairly ambiguous, but I think it's likely that any connection between druids and mistletoe are coincedental when it comes to our Christmas associations. This article has a great overview of the basics. I also liked the Smithsonian's overview.
Christmas History Advent Calendar
Mistletoe is day 7.