Added on 041208:
OMG! Pics!…read more(http://www.ka-news.de/fotos/bilddetail/cme1855,72297.html?SORT=PRIO) Must see! :D
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This Christmas market is held in the heart of Durlach, about 15 minutes from Karlsruhe by tram. (Tram #1, Tram stop: Schlossplatz)
The few stalls in the front part sell the usual food/beverages/ornaments/etc. like other normal Christmas markets, but if you walk farther you'll feel like you're going back in time.
The vendors wear medieval clothes and they speak a distinct style of german (I think, I hope someone else can confirm that since my grasp of german isn't that good ^_^). There is a booth selling bows and arrows, another booth selling medieval clothing, some booths selling decorations made from wood, some others selling food (my favorites are Rittersteak and some kind of Fladenbrot--they're all very yummy) and a couple of taverns (mead! yoohoo!).
Oh, and there is even a storyteller! She usually stands in the middle of the market, close to the big campfire, telling stories or playing some kind of flute.
I prefer this market than the one in Karlsruhe's Marktplatz, I like the flair and it's not so crowded. The only downside is that with all those campfires around the market you'll reek of smoke.