Indeed, the fair folk do not exist wholly on this plane of existence, they are not made of flesh and bone and can not exist fully here. If we look at old Celtic myths, many believe and say that the fair folk were once gods, not tiny little things with butterfly wings. They however, left earth and journeyed into the west (yes just like lord of the rings, tolkien used that idea), where they would live forever with the two Gods, in their four cities.

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