Note Doc's line at 5:01: "Tell me, Sprocket -- are these anything like these 'Fraggles' you keep telling me about?"
Now, what's inferred? That Doc's only ever heard of Fraggles by word of mouth from his dog, yes? Sure! ...after all, that'd be absolutely, 100% consistent with the first 94 (of 96 total) episodes of Fraggle Rock: at the end of episode 95 "The Honk of Honks", Doc finally set eyes upon a Fraggle -- specifically, Gobo -- for the first time...setting the stage for "Change of Address", at the outset of which, Doc and Gobo had their first face-to-face conversation...only shortly thereafter, heartbreakingly, Doc and Sprocket found themselves obligated to move out of the workshop and part ways with the Fraggles.
But, anwyay, in light of Doc's "these 'Fraggles' you keep telling me about" aside to Sprocket, we can simply write off A Muppet Family Christmas as taking place prior "Honk of Honks"...no big deal, right? (...especially considering that virtually no Muppet production has ever been particularly continuity heavy! In fact, "Change of Address" -- the series' last episode -- was the first to directly follow up on the events of the one that'd preceded it...and may have been the only episode to directly allude to another!)
But here's the kicker: at 40:31in Family Christmas, Gobo and the other four "main" Fraggles" emerge from the depths of Fraggle Rock into Fozzie Bear's mothers' living room. Such a scenario could only conceivably occur after "Change of Address"; in every last one of the first 95 episodes, Gobo is the only member of "the Fraggle Five" to ever (and regularly, to retrieve Uncle Matt's postcards from Doc's wastebasket) breach the border between Fraggle Rock and what Fraggles refer to as "Outer Space" (essentially, Earth's surface; "our" world)...until the series finale, "Change of Address", in which Wembley, Red, and Mokey explicitly for the first time, muster up the nerve to accompany Gobo into Doc's workshop. (A trembling, terrified Boober remains just within the "doorframe" of the opening in Doc's [now former] workshop's wall, just at the point where he'd step out of Fraggle Rock and into the wild unknown that is "Outer Space"...)
So, in short: just a few minutes into Muppet Family Christmas, Doc says a thing necessitating that we're witnessing a pre-"Change of Address" Doc and Sprocket...but then, just a few minutes from the end, Wembley, Red, Mokey, and Boober do something that they'd never done prior to "Change of Address".
I first saw Muppet Family Christmas at some point in the early `90's...thus, this discrepancy has been bugging me for an entire two decades. In a few decades, I'll probably even bring it up and gripe about it on my death bed.
...but in all seriousness, this TV special is a gem. The inclusion of the pop culturally-ubiquitous Sesame Street cast is fun, but in 1987, a Muppets [of the Kermit and Co. variety] crossover with Sesame Street wasn't by any means unprecedented. The inlcusion of the Fraggles was far more unlikely, and you can be assured that when I was first exposed to the special via that aforementioned early `90's rerun, I absolutely relished witnessing their meeting Kermit and Robin. (In fact, now that I think of it, at some point within the two or three years or so years preceding said personal first viewing, another boy who lived on my street told me of the special and said momentous Kermit-meets-the-Fraggles scene, and I reacted with awed disbelief and jealousy, heheh.)
But even the Fraggle cameos (that's what they boil down to, more or less) are conventional, in comparison to how prominently featured are Doc and Sprocket. My being a lifelong Fraggle Rock fan has always entailed a soft spot for Gerry Parkes' Doc and Dave Goelz and Karen Prell's Sprocket, and I've always very much appreciated the due this unlikely venue gave them.
One last comment: the Christmas carol medley that serves as the special's grand finale is delightful. I've repeatedly said that Jerry Nelson's singing is my favorite of that of any of the Muppeteers, and his rendition -- as the Count -- of "I Saw Three Ships" gets me every time.