The central twist of "The Nightmare Before Christmas" is not a sudden reveal, but the gradual and disastrous unfolding of Jack's plan. His attempt to bring Christmas to the world results in terror, with his Halloween-themed toys traumatizing children instead of bringing them joy. This leads to the military being called in to shoot down his sleigh, and Jack is presumed dead by the residents of Halloween Town.
Jack survives the crash, and in a moment of clarity in a graveyard, he realizes his folly. He understands that he was trying to be something he is not and, in doing so, nearly ruined Christmas. More importantly, he rediscovers his love and passion for being the Pumpkin King. This moment of self-realization is the true climax of his character arc. He realizes, "I, Jack, the Pumpkin King!" and rushes back to Halloween Town to set things right.
Meanwhile, Sally has been captured by Oogie Boogie along with Santa Claus. Jack returns to defeat Oogie Boogie by unraveling his burlap sack exterior, revealing him to be nothing more than a mass of bugs, which then disintegrate. Jack rescues Sally and Santa, who then magically restores Christmas. The film's ending sees Jack and Sally finally confessing their love for one another atop Spiral Hill as Santa brings a gentle snowfall to Halloween Town, a symbol of the two holidays coexisting peacefully. This ending reveals that the true meaning Jack was searching for was not in another holiday, but in the love and acceptance that was right in front of him all along.