Between gods and humans dwells a third, half-hidden race: the elves (Old Norse álfar). They are bright and beautiful, or dark and earth-bound, half a blessing and half a danger – and of all the beings of the North they have survived the longest.
The word elf (Old Norse álfr, plural álfar) still lives on in German words such as “Alptraum” (nightmare – the elf that sits on the sleeper’s chest at night) and in given names like Alfred (“elf-counsel”). In the sources the elves often appear in the same breath as the gods – “Æsir and elves” is a fixed formula of the Edda.
Snorri distinguishes two kinds: the light-elves (ljósálfar), who dwell in the world of Alfheim and are “fairer than the sun”, and the dark-elves (dökkálfar), who live beneath the earth and are “blacker than pitch”. Intriguingly, these dark-elves blur in the sources almost into the dwarves – both are underground, artful beings. Whether Snorri is tidying up an older notion here or systematising it himself is disputed in scholarship.
Alfheim, the world of the light-elves, tellingly belongs to the god Freyr – he received it as a “tooth-gift” on cutting his first tooth. Fertility, light and the elves thus belong together.
Elves could bring illness (the “elf-shot”, elf-caused affliction) or grant luck and fertility. This double nature makes them one of the most living elements of the old faith – and one that outlasted Christianisation: as “elves”, “wights” and “huldufólk” they live on in Icelandic and Scandinavian folk legend to this day, and through Romanticism and Tolkien they have become the elves of modern fantasy.

Freyr & Alfheim · The dwarves · The nine worlds · The god pantheon.
Poetic Edda: Grímnismál (Alfheim/Freyr), Hávamál, Lokasenna (“Æsir and elves”). Snorri Sturluson, Prose Edda (Gylfaginning: light- and dark-elves), c. 1220. Sigvatr Þórðarson, Austrfararvísur (Álfablót). English public domain: Henry Adams Bellows (1923). Scholarship: Rudolf Simek, Dictionary of Northern Mythology; Alaric Hall, Elves in Anglo-Saxon England (2007).