The days of Ḥol Ha-mo’ed are neither weekdays nor Yom Tov, but something in between. Thus, some melakhot are permitted on them, while others are prohibited.
The Torah emphasizes that the first and last days of Pesaḥ and Sukkot are “sacred occasions” during which people must not work at their occupations (Vayikra 23:7-8; 35-36). In contrast, when speaking about Ḥol Ha-mo’ed, the Torah does not explicitly forbid melakha. On the other hand, given that the days of Ḥol Ha-mo’ed take place between two holy days, that they seem to be included with the “sacred occasions” at least once (Vayikra 23:37), and that festival offerings are sacrificed on them, clearly they are not just ordinary workdays. In fact, the Sages infer from a number of verses that there is a work prohibition on Ḥol Ha-mo’ed (Ḥagiga 18b). The difference is that on Yom Tov all melekhet avoda (occupational work) is prohibited, while on Ḥol Ha-mo’ed only certain melakhot are prohibited.
Speaking in generalities, we can say that on Shabbat all melakha is prohibited; on Yom Tov melekhet avoda is prohibited (while melakhot of food preparation in a private home for same-day consumption are permitted); and on Ḥol Ha-mo’ed the only melakhot that are prohibited are those which are demanding or time-consuming (as explained in the next section), and which are not necessary for the festival or to prevent a loss.
The work prohibition on Ḥol Ha-mo’ed is a result of the sanctity with which the Torah endows it. However, the Rishonim disagree as to the precise nature of the prohibition – is it biblical or rabbinic in nature? Many write that a bona fide melakha that is demanding or time-consuming is prohibited by the Torah (unless it is undertaken for the sake of the festival or to prevent a loss, in which case it is permitted). Beyond that, the Sages added protective legislation and prohibited certain melakhot even when they do serve the festival or prevent loss.
One who performs prohibited melakha on Ḥol Ha-mo’ed is considered to be belittling it, and has no portion in the World to Come (Pirkei Avot 3:11, following Rashi and R. Ovadia of Bertinoro). The Sages further state that “Anyone who belittles Ḥol Ha-mo’ed – it is as if he worships idols” (Pesaḥim 118a).
One who performed prohibited melakha on Ḥol Ha-mo’ed is not allowed to benefit from it. However, people who are not members of his household may benefit. When beit din had the power, it would fine anyone who worked on Ḥol Ha-mo’ed, and destroy whatever he had made (SA 538:6; see Harḥavot 11:1:11-13).