If there's a Shadowdark, there must be a corresponding Lightbright. The cosmic balance of the multiverse depends on it!
ANYwho, my homebrew world's Land [coterminal plane] of Faerie is fairly well integrated into the setting's cosmology. There are "nicer/brighter/happier" areas of the Fae and there are "darker/gloomier/nastier" parts the closer one gets to the planar borders of the Shadow plane. It is a place of the "Faerie" of legend and folkore from the British Isles and Erie -complete with toadstool circles/stone henges/oaken grove/rock walls or fallen tree portals back and forth (to various other planes or sections of Faerie), some elements/kookiness of Alice in Wonderland, some Narnia/Oz talking-anthropomorphized animals, Neil Gaiman's realm of the Dreaming (lighter and darker elements), Pan's Labyrinth, and all around "super-[magical]-nature" and alien-otherworldly beauty.
Elves, as in PC races that folks know/interact with, are actually Material Planar beings in my world. Born of the spilled blood of an elder deity. Initially immortal, but can be killed and/or "die" by [consciously] transcending their physical forms (after several millennia, and a general boredom-malaise that takes hold, this is generally undertaken by choice) to continue a spiritual/energy existence in the higher planes.
Elves who consciously chose to go to the Realm of Fae at its creation (another setting legend/myth for another time) set up their own strongholds and established "kingdoms" there and multiplied. These are the Sidhe. The most magical/otherworldly elements of the Tuatha de Danaans, essentially. Super magical. The "nobles" and rulers of Faerie, though I do not use the Seelie/Summer-Winter/Unseelie courts thing. . The elfiest elves who ever elfed elfish.
It is believed (by some sages and scholars of such topics, the dalevar of Orea have no such records or legends of their own origins) Halflings (for PCs) in the setting are the material immigrants FROM the Faerieland TO the Material plane. Just kinda came and set up shop and are happy as clams in their rural quiet comfortable existences. Brownies, basically, who adapted/[de-?]evolved to an existence/nature that was un-magical in the Prime Material world. How or why a group of Brownies would have made such a decision is anyone's guess.
Those same scholars, though it is impossible to get a straight answer out of a gnome themself, are assured that the Gnomes of the material plane are exiles from the realms of Faerie closest/and most closely attuned to the Earth Elemental plane....banished Spriggans (and among one school of thought, banished and cursed Firbolgs), some of whom delved the deepest recesses of the earth in search of ways back to the Fae and found avenues to Elemental Earth, at least, the Dactyloi (my setting svirfneblins), and some who came across much darker powers, becoming the Derro and/or Duergar.
Goblins -while indisputably material creatures fallen to evil who multiply at an uncontrollable rate- are found throughout the Fae realm. Some by their own accidental crossing through a portal, others as dark armies recruited/ensorcelled for would be fae-lord conquerors, or native fae-beings tainted by contact with unspeakable unknown evils, fae-goblinoids are a dangerous bunch. The most commonly referenced in fire-side tales and stories for naughty children, are the Redcaps. Straight up homicidal psychopathic murdering goblins looking to slice and dice anything goodly or innocent they come across. Boggarts are also reputed by many to be goblins mutated by and/or originating from the Faerie.
While the male Troll has been a festering rot, scourge of stupidity, overbearing size, strength, and cruelty on the material world for unknown eons, the females of the species -collectively known as "Hags"- are the innately more magical inhabit the Faerie in numbers, possessing both the knowledge and magic for crossing between realms as they wish. As such, male trolls and ogres are often encountered at the edges of the fae realms closest to the materials, on both sides of the Veil.
Of course "sylvan" creatures are known to inhabit the Fae and Material planes in nearly equal numbers. The Satyrs of the setting (a PC race) have cousins in faerie, much more magically adept than material plane satyrs, known as "Fauns." Centaurs are largely the same in either plane, viewing the Faerie as just another facet/extension of their spiritual existence. Forest Giants (my setting's Treants) and proper "faeries": pixies, sprites, nixies (elemental-water sprites), gricks, pucca, and the like...also nymphs (dryads, nereids, et al.)...are found in either plane and seem to have a capacity -or at least the knowledge of how/where to go- to cross between the Material and Fae lands freely.
Fae Giantkind is not limited to the tree-like Forest Giants. As most things in the Faerie, size is a largely varied and relative thing. Known specimens of giantkind - who once traveled to, became residents of, or in one case were banished to/imprisoned within the fae realms are the Firbolg and Veerbeeg, and the grotesque misshapen Formor who have battled wit the bright Sidhe kings and queens for uncounted ages.
Dragons of the Faerie, like most all of its beings, come in a variety of shapes and sizes from the somewhat "commonly" known, among adventuring types anyway, tiny butterfly-winged direct-though-aptly-named "Faerie Dragons," to the lumbering gregarious ever-friendly wyrms known as "Rainbow Dragons," to the dazzling shining might and transcendent powers of -what are somewhat mistakenly referred to as- the "Gemstone Dragons." As always, where beauty and goodness reign, there will be evil trying to bring it low, spewing dark and sinister drakes and wyrms of all types -one most famous was once called "Jabberwock." Whether that was the creature's proper name or not is a matter of some contention amongst scholars of the Faerie- who inevitably slither into the Fae in search of fabled magics and treasures...or simply to spread their evil and darkness and squelch the general "good" nature of the plane.
What else was it you wanted to know about [how I handle] the Faerie?
The reason I went into the why and how is that this is for D&D. The players often want an explanation beyond "because that's how it is" so that they can try to spin clever plans and try to out trick the opposition.
