1. An imaginary [sic] supernatural being or spirit, supposed to assume a human form (usually diminutive), either male or female, and to meddle for good or evil in the affairs of mankind; a fay. See elf. "Elves and fairies in a ring."--Shakespeare
SOURCE: Merriam-Webster, 1927
2. A realm of nonhuman entities associated with the natural world; also the entities themselves. Technically speaking, an inhabitant of Faery is a fay, not a faery or fairy, but the terms have become totally confused over the last half-dozen centuries or so. The exact nature of Faery and its inhabitants has been a subject of quite a bit of debate down through the years, in and out of the Western occult traditions.
Entities of the sort later known as fays, elves, and the like can be found in ancient Greek and Roman sources, where they blend in seamlessly with the realm of nature spirits and minor gods – the background fabric of classical religion. This same attitude can be found in Germanic and Celtic traditions, where the boundaries between gods and elves are impossible to draw.
Current ideas about faery in the occult community range across the spectrum from Jungian analyses that conceptualize them as psychological realities through Theosophically derived teachings that see them as participants in another current of evolution (one that starts with elementals and proceeds through faeries, devas, and angels to archangels and beyond), to Pagan conceptions that interpret them as simply one part of the complex fabric of spiritual reality, bring the wheel around full circle. Which of these is closest to the truth, only the fays know – and they’re not saying.
3. Fairies are viewed in many modern Wicca/Witchcraft traditions as spiritual beings whose actions maintain the life force in Nature. The fairy concept has its origins in the Neolithic Cult of the Dead in Old Europe and to the ancient burial mounds of that period.