The holidays leave Holiday Island to form the Holidays in
Holiday Lawndale, sparking off the events of "Depth Takes a Holiday" - there's no reason why they couldn't form a band on Holiday Island, the island just sucks. Lawndale is the site of their rehearsals, i.e. freeloading off people and arguing with each other. The band returns to perform at Holiday Island High School's prom and stay when they realise that in their absence, President's Day run the place. They go down so well they're booked for parties up until the next year.
Trent is in the first version of the band and they rehearse at the Lane house, but he leaves at the end of the episode. He's replaced by the George Washington half of President's Day, who can play acoustic and electric harpsichord.
Writers of alternate universe series have outright avoided making AUs of this episode until 2011, so the Holidays mostly went uncovered. There's a brief reference in TAG's "A Hard Days' Night" and an alternate solution to their problem in the genderswap series "Not So Different", and the band makes a full appearance (with International Talk Like A Pirate Day added) in "God Save The Esteem".