•Why it earns a slot
Why it earns a slot: it's the most famous irony structure in short fiction, but reading it straight (not as a plot-twist anecdote) shows how tightly O. Henry builds the reversal, every early detail, the watch, the hair, the exact dollar amount, is a loaded gun that fires in the last three pages.
A poor couple each sell their one prized possession to buy the other a Christmas gift, and the gifts arrive useless on the same night.
This distillation is written from the freely available original, which is always the better read when you have the time: Project Gutenberg.