idogendel.com used an Arduino and some shift registers to create this nice looking Christmas Tree Ornament. The LEDs shine through the holes in the box and are diffused using the paper front.
“I built this little Xmas-tree DIY Arduino project to demonstrate the use of the 595 Shift Register ICs (see link below) as output port expanders: 12 bi-color LEDs are handled using three 595’s and just three Arduino pins. “