That is gorgeous.
A few years ago, when I was broke and time rich, I made a collection of tiny stockings out of felt (mainly red but some green), with a little ribbon loop in the corner. Some of these went as gifts to my mum, then future MIL and my grandmother, and I made some another year for our own tree (just before we got married and again were smashed broke).
Cut a little stocking shape about 3-4 inches high, either blanket stitch it by hand (could use plain thread to hide stitches or glittery thread to be seen), or run a straight seam on the machine. As it's felt, no problems with unravelling (could even glue together it you wanted). Stitch the ribbon loop into what would be the top corner at the back of your foot (if you were to wear it).
The front can be decorated with little pieces of felt (I cut red hearts and stitched to a green stocking, or little white snowflakes on red), beads or buttons, ribbon flowers, crochet pieces, (I found an old doiley my mom had cut into little circles in her stash, and (with permission) took a few of those), a white ribbon on the bottom of a green one with some little white beads coming down across the front (snowshower) - imagination can run wild.
A few years I found lovely candy canes to put into these stockings (which appear every year on my Mum, MIL's and our trees) but they are not too common over here (and the sizes could well be different to those you have in the States). And they take hardly any space to store, and don't need much care to store either (not like my glass balls). The second year my mum had them (they were her Christmas present the first year), she hung them on the tree but we came down on Christmas morning to find that Santa had put a candy cane in each of them (luckily there were enough to go around all 6 of the siblings!!).
rnament: 
