What is a fairy? I have placed a few definitions of a fairy on this page. Do you have a definition you would like to add? Amy Brown at Hottopic.com
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Here is what I have found in the Microsoft ® Encarta ® Encyclopedia.

Fairy and Fairy Tale, in folklore, a diminutive supernatural creature, generally in human form, dwelling in an imaginary region called fairyland; and the stories of its interventions through magic in mortal affairs. The term fairy is also loosely applied to such beings as brownies, gnomes, elves, nixies, goblins, trolls, dwarfs, pixies, kobolds, banshees, sylphs, sprites, and undines. The folk imagination not only conceives of fairyland as a distinct domain, but also imagines fairies as living in everyday surroundings such as hills, trees, and streams and sees fairy rings, fairy tables, and fairy steeds in natural objects.

The belief in fairies was an almost universal attribute of early folk culture. In ancient Greek literature the sirens in Homer's Odyssey are fairies, and a number of the heroes in his Iliad have fairy lovers in the form of nymphs. The Gandharvas (celestial singers and musicians), who figure in Sanskrit poetry, were fairies, as were the Hathors, or female genii, of ancient Egypt, who appeared at the birth of a child and predicted the child's future.

The traditional characteristics of fairies are depicted in European literature in such works as Shakespeare's A Midsummer Night’s Dream and Romeo and Juliet (in Mercutio's “Queen Mab” speech); The Faerie Queene by Edmund Spenser; L'Allegro and Comus by John Milton; Contes de ma mère l'oye, known in English as Tales of Mother Goose, by Charles Perrault; Kinder-und Hausmärchen, known in English as Grimm's Fairy Tales, by the brothers Jacob Ludwig Karl Grimm and Wilhelm Karl Grimm; a fairy-tale series by Andrew Lang, for example, The Blue Fairy Tale Book and The Red Fairy Tale Book; and representative collections of Irish stories such as Fairy Legends and Traditions of the South of Ireland by Thomas Crofton Croker and Irish Fairy Tales by William Butler Yeats. Croker has described fairies as being “a few inches high, airy and almost transparent in body; so delicate in their form that a dewdrop, when they chance to dance on it, trembles, indeed, but never breaks.” In folklore fairies are generally considered beneficent toward humans. They are sensitive and capricious, however, and often inclined to play pranks; so if their resentment is not to be aroused, they must be spoken well of and always treated with deference. Bad fairies are thought to be responsible for such misfortunes as the bewitching of children, the substitution of ugly fairy babies, known as changelings, for human infants, and the sudden death of cattle.
Microsoft ® Encarta ® Encyclopedia 2004. © 1993-2003 Microsoft Corporation. All rights reserved
 
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Encyclopedia Mythica Fairy by Micha F. Lindemans
The original fairies, or faeries, bestowed gifts upon newborn children, such as beauty, wealth and kindness. In the subsequent centuries they continued this original function, but expanded their activities into other types of meddling in human affairs. Fairies can only be seen clearly by animals and seldom by humans, although if one is fortunate enough, one might catch a fleeting glimpse. There are a few exceptions however. The first is when fairies use their power (known as 'glamour') to enable a human to see them. Also, during a full moon on Midsummer Eve a mortal witness fairy dances or celebrations. And finally, by looking through a self-bored stone (a stone in which a hole has been made by tumbling in the waters of a brook; not found on a beach) one can see fairies distinctly. The rulers of the race of fairies are Queen Titania and her consort Prince Oberon, their court being in the vicinity of Stratford-on-Avon. Other synonyms and euphemisms for fairies are: the Little People, the Green Men, the Good Folk and the Lordly Ones. The name is probably a combination of the words fae "friend" and eire "green." So Faerie means "Green Friend."
 
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Fairies are small supernatural creatures of human form. They live in everyday surroundings. They are generally thought to be beneficial to humans. However, they are known to play pranks and it is best to treat them with respect. They are small, beautiful, airy, nearly transparent in body, and can assume any form.
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Fairies, as we know them today, are the ancient remnants of the Tuatha de Danaan, which means the people of the goddess Anu. Anu being like Mother Earth, the Tuatha were the gods and goddesses of the various aspects of nature. Like Nature itself, some were good and some were pretty frightening. With the onset of Christianity, these creatures, while still a rich part of Celtic myth and legend, grew considerably less forbidding and less powerful over the centuries becoming the whimsical, ethereal, airy, creatures we think of today.
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