Translation:I wish you a pleasant holiday!
This is ridiculous! I wrote: "I wish you happy holidays!" but it got rejected.
I understood that that 节日 means holiday as in festivals/religious holidays/public holidays etc. Does it then mean holiday as in vacation, as well?
No, vacations use the word 假 (寒假，暑假，等). I'm sure you'll remember it now that I've replied, LOL.
For what it's worth, though, most Chinese speakers of English have adopted the British use of "holiday" where Americans use "vacation."
I think for our context, it could be interpreted that way. And certainly in China, their Spring Festival holiday incorporates two separate celebrations: New Year and the Lantern Festival. But strictly speaking, 节日快乐 means simply "happy holiday" (singular).
'Happy holidays' is accepted. I don't think it's really a matter of singular or plural--it's just a set phrase. No one would say 'Happy holiday', maybe because Hallmark et al have printed 'Happy Holidays' millions of times.