The Sims Vacation offers three basic modes of play: Build, Buy, and Live. When in Build mode, you can construct houses, create landscaping, or, if on the island, build shops, hotels, and other vacation type buildings. In Buy mode, you can purchase items for your home or vacation structure. When in Live mode, you can interact with your home and neighborhood, including any of the people who you either directly control, or who you visit with.
Live mode is the heart of the game, and with the Vacation add-on you can interact with people and objects, and you can also buy stuff. The focus of this particular add-on is taking the family or a friend on vacation to have a good time, so besides new objects, new sounds, and new music, there's the island area where you can find lots of cool things to do.
At any point in the game you can call a cab to take you on vacation, and there you will find souvenir shops, games, restaurants, hotels, and rental shops, as well as lots of people to interact with. When you travel to the island, the game world just stops while you are away. If you have the money, there are plenty of new items to purchase while you are away. If your family stays in a good mood while visiting the island, it is even possible to get super souvenirs!
The number of interactions people can have has been greatly increased. Now you can deal with people in brand new ways, whether it's flirting with someone of the same or opposite sex, bragging about yourself or offering others compliments, there seem to be dozens of new selections to choose from. This seems to be similar or identical to the new functionality presented in Hot Date.
In addition, you can also build your own shops and restaurants on the island. The same building tools that allow you to create homes in the neighborhood allow you to build on the island. All of the island objects are available, as well as many of the ones normally available when creating a new house.