In USA, Canada, and the United Kingdom, the modern children's folklore of Santa Claus typically includes diminutive, green-clad elves as Santa's assistants. They wrap Christmas gifts and make toys in a workshop located in the Arctic. In this portrayal, elves slightly resemble nimble and delicate versions of the dwarfs of Norse mythology. However, the elf legends are in fact, even older than Saint Nicholas, the bishop on whom Santa Claus was originally based.
What remained of the belief in elves in German folklore was that they were mischievous pranksters that could cause disease to cattle and people, and bring bad dreams to sleepers. The German word for nightmare, Albtraum, means "elf dream". The archaic form Albdruck means "elf pressure"; it was believed that nightmares are a result of an elf sitting on the dreamer's chest.The elves (light-elves) are often mentioned along with the Aesir, instead of the Vanir (a race of gods). The names Vanir and Alfar (light elves) may have been either synonymous, since the expression "Aesir and Alfar" meant "all the gods", or designating a difference in status between the major fertility gods, the Vanir, and the minor ones, the elves. The Van Freyr was the lord of lfheim (meaning "elvenhome"), the home of the light-elves, and he had as servants two elves: Byggvir and Beyla. Like the Vanir the elves were associated with fertility and, in late fall, the "alfablt" (elven sacrifice) was performed in the homes. It was secret, no strangers were allowed in the homes, and so next to nothing is known of it.The Svartalfar live in Svartalfheim. In some sources they are identified with the dwarfs of Nidavellir, who likewise had a reputation as skilled smiths. In general, however, elves and dwarfs are distinguished in surviving Norse literature.
The elves of Norse mythology have survived into folklore mainly as females. The lvor (Swedish, singular lva) were stunningly beautiful girls who lived in the forest with an elven king. They were long-lived and light-hearted in nature. They could be seen at night dancing over meadows. The circles they left were called lvdanser (elf dances) or lvringar (elf circles). If a human watched their dance, he would discover that even though only a few hours seemed to have passed, many years had passed in the real world. (This time phenomenon is retold in Tolkien's Lord of the Rings when the Fellowship of the Ring discovers that time seems to have run more slowly in elven Lothlrien. It also has a remote parallell in the Irish sdhe).
Scandinavian mythology includes light-elves (Lioslfar) who dwell in the third space in heaven, dark-elves (Dcklfar), and black-elves (Svartalfar). The black-elves were skilled smiths, and the most skilled were reputed to be the sons of Ivaldi, the father of Idun.Tolkien's The Lord of the Rings (1954-1958), became astoundingly popular and was much imitated. In the 1960s and afterwards, elves similar to those in Tolkien's novels became staple non-human characters in high fantasy works and in fantasy role-playing games (RPGs).Elf, fairy, and other terms for nature spirits like pwcca, hobgoblin, Robin Goodfellow, the Scots brownie, and so forth are no longer clearly distinguished in popular English folklore, nor are similar terms in other European languages.Towards the end of the 20th century, a number of people have begun to describe themselves as elves, usually more of the Tolkien than the folkloric Santa type. Many of these people can be found in the Otherkin subculture.The Brothers Grimm fairy tale The Shoemaker & the Elves is probably the most famous original elf tale. The elves are only one foot tall in this story, naked, and like to work on shoes, as leprechauns do. When the shoemaker rewards their work with little clothes, the elves are so delighted, that they run away and are never seen again. (This tales is echoed in J. K. Rowling's Harry Potter stories: see below.)