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What are commonly called "faerie" are in reality several races closely related to humanity: elves, dwarfs and goblins.  These races inhabit several proto dimensions that touch on each other and on Earth.

Elves are the most closely-related faerie race to humanity, having descended from archaic Homo Sapiens.  All elves are Empaths, and the proto-dimensions they inhabit facilitate the use of magical skills (tasks are typically one level easier).  Each elven proto-dimension is its own kingdom, and these kingdoms often make war upon one-another.  Occasionally elves will go looking for allies or weapons on Earth to gain an advantage over another kingdom.  Many elves can pass as human; however, most elfish races are smaller and lighter than the average person; for example, the leprechauns of Ireland are an elfish race averaging 75cm high and massing less than 20 kg.  Halflings, gnomes, brownies, sprites, nymphs and similar beings are distinct elfish races.  Because of their close relationship with humanity, elves can breed with humans, producing "half-elves" that invariably have some sort of Empathic ability (+1 Empathy attribute).  Some of the most famous (or infamous) wizards in history have had a taint of elfish blood in their lineage.

Dwarfs are distantly-related to humanity, having descended from from Homo Neanderthalensis.  Dwarfs inhabit mountainous proto-dimensions.  Dwarfs are not naturally Empathic, per se, however the items they create in their forges evince some magical abilities.  For instance, dwarf-forged blades may give the user a -1 Diff Mod to hit and cause double damage, or a suit of dwarf-crafted armor might have double the AV of a comparable suit crafted by a human.  Because of this ability, dwarf-made items are constantly in demand by those who know of them.  Dwarfs, however, are loathe to part with items they've lovingly created and this often brings them into conflict with other races.  The typical dwarf is one to one and half meters high and masses about 80 kg.  There doesn't appear to be as much variation within the dwarf race as is found in the other faerie races.  Dwarfs are incapable of breeding with any other race (and would probably not want to in any event).

The final race of faerie are the goblins.  Goblins descended from Homo Erectus (as did the other races, including humanity).  Very few goblins show any Empathic abilities (-1 Empathy).  Much like dwarfs, goblins prefer mountainous proto-dimensions, which occasionally puts them into conflict with the former.  Goblins also like heavily-forested or otherwise dim or murky proto-dimensions.  Direct sunlight is painful to goblins, and they perform all tasks therein at +1 Diff Mod.  Goblin races are as varied as elven races.  The smallest goblins stand about a half-meter tall and mass about 15 kg.  In some proto-dimensions, the local physics have allowed goblins to achieve truly monstrous size, with some achieving heights in excess of 6 meters and massing nearly three tonnes.  Goblin races include orcs, kobolds, ogres, trolls and giants.  Some goblin races have bred huge wolves to serve as mounts.  A small percentage of goblins appear close-enough to the human norm to pass themselves off in human society.  Goblins can interbreed with humanity (but not with elves), producing "half-orcs" and "changelings."