It's a little thing called nanotechnology, which is what makes Santa's "magic sack" possible. Scientists would have you believe that this technique of manufacturing goods atom-by-atom on a microscopic level is in its early stages, but trust us, this is totally a thing and has been in the works for a while now.

Since all things, whether made of gold or Styrofoam, are really just made of atoms, and since atoms are everywhere, it's entirely possible to make toys and video games seemingly appear out of thin air. Clearly Santa's bag is a nanotech factory that can spontaneously build your gifts on the fly. It's the only explanation that makes sense.

Santa likely uses soot and candy canes as base materials, which would then be broken down into their base elements and then restructured as Transformers, My Little Ponies and Xboxes (note: Santa also owns a licensing empire).

Experts say that in order for the nano-present assembly sack to work, Santa merely needs to apply electromagnetic fields to reverse "irreversible" thermodynamic properties. In English, it means it can rip apart matter, rearrange it and put it back together into stable molecules in order to build the presents for all the good little girls and boys.

One other theory is the is the use of the Transdimensional Present Compartment (The Bag).  Think of a transdimensional present compartment in the form of a traditional gift sack, which would act as a portal between the sleigh and the North Pole.