If an elf is being observed - ie someone is looking at and noticing the elf - then what does s/he actually do, in the fiction, to become hidden behind falling snow or a tree branch?
If s/he is not under observation, I understand that s/he "blends in" like your Where's Wally example.
But if s/he is under observation, how does s/he blend in? The observer can follow the elf and his/her movements, defeating the attempted blending.
They can try to follow the movements. That is their perception vs. The elves stealth.