pl. n. fairies; adj. fay, fae; p.n. Faerie
1. n., in common usage, a mythical being of folklore and romance usually having diminutive human form and magic powers; from Middle English fairie “fairyland” “fairy people” (does not predate 14th century); from Old French faerie, from feie, fee “fairy”; from Latin Fata, Goddess of Fate, from fatum “fate.”
2. in fantasy fiction or gaming milieux, creatures inspired by European fairy lore; includes dryads, nymphs, pixies, brownies, gnomes, etc.
3. p.n., in European fairy lore, the physical location and/or spiritual realm containing the fairy homeland. Also Avalon, Avalonea.
Addendum: An incomplete list of alternate forms follows. Noun: (sing.) fairy, faerie, faery, (pl.) fairies, faeries, fae, fay, fairy-folk, faerie-folk, Fairy Court. Adjectives and adverbs: fae, fay, fairy-like. Also sidh (pronounced “shee”), from Gaelic daonie sidh (pronounced “theena shee”) “fairy court”; Little People, Good People, Good Folk, Seelie Court, Unseelie Court, elf.
Addendum #2: “Faerie” is the preferred spelling for gamer/fantasy/mythology afficianados. Faeries are one of the few major fantasy milieu concepts not lifted from Tolkien (although one can argue that Goldberry the River Spirit was close).