My family has done this since my dad started the tradition in the mid-60's when we were young. At that time, there were 6 of us kids. I had another sister born after the tradition started. My dad realized our family would grow and decided to start a tradition that gave everyone an opportunity to give a gift and receive a gift while not spending too much money (obviously at that time, it came from his pocket). He placed a price limit on the gift. We drew names and we kept the name we had a secret. This added extra fun to the tradition.
As we married and had kids, the tradition has been maintained. It is voluntary because some in the family have had hard times and, even buying the name gifts for our holiday family gathering, would have been too much for them.
When we draw names, it gives us an extra opportunity to have a family get-together. Still, not everyone can make it so we always have a designated drawer, usually my mom, who draws those names and sends them to the absent parties.
We still limit the amount spent which is currently at $20. We also put together wish lists so everyone has an idea of what to purchase for their namegift. We try to get the wishlists out before Nov.
Oh yes, to add extra fun, we start youngest to oldest for drawing names one year, and then go oldest to youngest the next.
Of course, my mom still gives a gift to all of her grandkids. And we still give a gift to our mom. And I know some godparents give to their godchildren, and vice versa. But it certainly helps keep the costs down by limiting the number of gifts as there are now 15 grandkids and 8 great-grandkids. If we were buying for each of the youngsters, we would be spending a lot more money.