everybody holds hands as everybody =he so it takes s, es, ies added to the verb who came after it.

I just want to add that everybody / everyone / everything are singular words. That's why we should use a singular verb: Everybody has arrived. (NOT everybody have arrived) But you can use 'they / them / their' after everybody / everyone: e.g. Everybody said they enjoyed themselves. Since 'Everybody holds hands' is a complete sentence, therefore we should use 'holds' (NOT 'hold').

Nino's answer is correct. I would just add that "Everybody holds hands." is indeed a complete sentence, because it has a subject and a predicate. If you add "...at the concert", then I *believe* it become a complex sentence.

Neither is more correct. Both sentences are equally correct. Everybody holds hands. That is a fact, that means everyone is holding someone else's hands, it is not a complete sentence. You would need to say "everybody holds hands at the concert" for example. Everybody hold hands. That is a command, that is someone telling everyone else that they must hold hands. This one is a complete sentence and is fine by itself, the other one is correct when it is part of a complete sentence, even though technically it is correct by itself it may not make a lot of sense.