Prepare the Dough

1. Activate the Yeast: In a small bowl, combine warm water, sugar, and active dry yeast. Stir gently and let it sit for about 5 minutes until the yeast becomes foamy.
2. Make the Dough: In a large mixing bowl, combine flour and salt. Add the activated yeast mixture, olive oil, and milk. Stir until the dough begins to form.
3. Knead the Dough: Turn the dough onto a floured surface and knead for about 5-7 minutes until smooth and elastic.
4. First Rise: Place the dough in a lightly oiled bowl, cover with a damp cloth, and let it rise in a warm place for about 1 hour, or until doubled in size.

Prepare the Pesto Filling

1. Mix the Filling: In a small bowl, combine pesto, Parmesan, and mozzarella (if using). Stir until well mixed and set aside.

Shape the Bread

1. Divide the Dough: Once the dough has risen, punch it down and divide it into 4 equal portions.
2. Roll Out the Dough: Roll each portion into a rectangle about 8×10 inches.
3. Add the Pesto: Spread a generous amount of pesto filling on each rectangle of dough, leaving a small border on the edges.
4. Stack the Layers: Place the pesto-filled dough rectangles on top of each other, creating a stack of 4 layers.
5. Cut the Tree Shape: Using a sharp knife or pizza cutter, cut the dough stack into the shape of a Christmas tree. Cut away the bottom to form the trunk of the tree.
6. Place on a Baking Sheet: Carefully transfer the tree shape to a parchment-lined baking sheet. Press the bottom of the tree together to form the trunk.

Second Rise and Baking

1. Second Rise: Cover the dough with a cloth and let it rise for another 20 minutes.
2. Preheat the Oven: Preheat your oven to 375°F (190°C).
3. Bake: Bake the tree-shaped bread for 25-30 minutes, or until golden brown on top and cooked through. You may need to cover the top with foil halfway through baking to prevent over-browning.
4. Cool: Allow the bread to cool for 10 minutes before slicing and serving.