I don’t think your explanations are valid. It is a matter of whether the speaker is thinking of a length of time (1) or a single event (2). However, neither preposition sounds right to me; I would use ‘during’.
How would you ask this type of question?
just: What did you do during winter vacation?
you would use the words IN or ON here?
IN sounds more the specific time, as ON sounds more at a specific place, isnt it?
And if you think person B has been ON vacation somewhere…
how would you ask this question? still …during winter vacation?
Ok, but when I google “On vacation” many websites come up… so I thought at least someway I can use On vacation… thats why I asked it again…
because it looks On vacation is official English.