For my homebrew world, I explore the following.
I see the main division of the Elf as:
• Bright Elf, angelic, celestial, luminous, sagely, with foresight, who empowers humans
• Murk Elf, beastly, underground, dark-dwelling, ignorant, with caprice, who undermines humans
The term ‘bright’ connotes luminosity, appealing beauty, and intelligence. The term ‘murk’ connotes the opposite, but is dwelling in darkness, not necessarily a dark pigmentation itself.
Both are spirits. In fact, both are spiritual echoes human actions. When humans do physical actions that are positive, then their behavior forms forces, patterns, and trends that shape Elves of positive energy. Oppositely, when humans do physical actions that are negative, then the behavior shapes Elves of negative void.
Essentially, this is a single kind of Elf who is Unaligned, but who mirrors human behavior, or more precisely, is the consequence of human behavior. Thus the Elf can behave as if virtually Good or as if virtually Evil, or gradations in between, depending on human activity. Of course, normally, most humans are a mix of positive and negative actions, so there are a mix of both Good-ish Bright Elves and Evil-ish Murk Elves. There are also more Neutral-ish, intermediary elves, who transition between the two Elf forms.
All Elves inhabit the spirit realm (≈ D&D ethereal plane). The spirit realm exists at different frequencies, sotospeak. Closer to positive energy, the spirit realm is vibrant and flourishing (≈ D&D Feywild). Closer to negative void, the spirit realm is gloomy and deathly (≈ D&D Shadowfell). Positive Elves and negative Elves exist at these different frequencies, respectively. Intermediary transitional Elves are more neutral, reflecting the mundane material world more closely, with less positive transfiguration and less negative transmogrification (≈ ‘shallow’ ethereal plane). The communities of the Bright Elf have little or no contact with the communities of Murk Elf, and viceversa. Similarly, Neutral-ish Elves are generally independent. But all Elf communities can see the human communities, are connected to individual human presences, and are hypersensitive to them. Generally, an individual Elf connects with a group of humans, especially a specific relationship between two to ten individual humans, whether positive or negative. Across time, the elven affinity often transfers across members of a human family.
There is only one kind of Unaligned Elf, but the physical appearance of this Elf shifts, when the human actions shift. Sometimes, an individual Elf is shifting back and forth between a positive form, a neutral form, and a negative form, depending on the actions of the humans that the Elf connects with. A shift, if any, tends to be subtle and monthly. Occasionally a transformation is dramatic. If moving from negativity toward neutrality, the negative beastly form shifts toward a more human looking with only subtle animal features. Moving further toward positivity, the Elf becomes fully human in appearance, but more angelic, radiating with a supernatural beauty that is actually luminous. The reverse is the case if moving from positivity to negativity. The angelic luminosity dims, becoming plainer, while animal features become increasingly prominent until grotesque. The animal features are especially bovid (cattle, sheep, goat, waterbuffalo, oryx, etcetera), thus sporting pointy ears, or perhaps small horns, or a tail, or so on. Perhaps alternative animalistic features may be possible (wolf fangs, butterfly wings, etcetera). The Elf never looks completely human, and is always with some angelic feature, beastly feature, or some combination of the two, even if subtle.
Heh, so the negative Elf becomes a kind of ‘sheeple’, sotospeak, seemingly dim-witted. Not necessarily unintelligent, but increasingly problematic socially and ethically, behaving in inappropriate ways, that inevitably make things worse for the humans. Altho some Murk Elves can seem as if unresponsive, they can erupt into terrifying ferocity. Generally, the Murk Elf is capricious, sometimes playful at inappropriate times, sometimes psychopathically murderous, but always for the purpose of corrupting the human.
Positivity (flourishing) correlates with the Good alignment, and negativity (destruction) with the Evil alignment. Nevertheless, the Bright can be misused for an Evil purpose, and the Murk can be used for a Good purpose, so there are important exceptions.
Humans experience the subtle influences of elven spiritual presences, but they rarely encounter elves directly. But it can happen. Elves can cross thresholds to materialize into the world of humans. Or conversely, humans can spiritualize into the worlds of elves.