I'd allow it but give the Elf the lucid dreaming ability - ie they're fully conscious throughout and can make decisions like its a mental exercise - then run it as a PvP adventurewell that just screwed one of my player goal to send 'innapropriate' dream into my other elf player that they had a fling![]()
Right there on Fey Ancestry, it says "magic can’t put you to sleep."It usually doesn't affect elves because they usually don't sleep (but go into a trance) or dream (while in a trance).
If you catch an elf sleeping (and/or dreaming) the dream spell would probably affect them as well.
You might need to hit them with an appropriate sleep spell first
The sleep spell doesn't mention not working on elves and the elf description doesn't mention an immunity to the sleep spell.