From Discworld & Terry Pratchett Wiki
Discworld's version of the Elves are nothing like the elves you might imagine if you are steeped in the Tolkienian traditions. They are wonderful, in that they inspire wonder; fantastic, in that they fabricate fantasies; marvellous, in that they generate marvels; and even terrific (they inspire terror). That glamorous image and reputation comes at a very high price indeed.
Elves live in Fairyland, a parasite dimension, a world that isn't quite complete by itself and has to ride along on a better world, Discworld being a prime example. There are barriers at locations where the elves' world is close to the Discworld. Some of these barriers weaken about once every fifty years. It is just as well that it is difficult for anyone, elves or Discworld people, to cross the barriers between Discworld and the elves' lands, because... well, a good adjective for the elves, you see, starts with an n, tip of my tongue, not nice. No, no one ever said elves are nice. Elves are nasty.
They have no artistic talents, but they want to have some fun, so they kidnap human musicians and bards, even children who are expected to sing, dance and play for their amusement. Elves have no sense of pain, heavily contributing to their lack of empathy, sympathy, or conscience. Elves are not evil in the same sense that Evil Dark Lords are evil (consult The Last Hero). Evil Dark Lords play by the rules and break their promises because they are evil dark lords, it is a sort of professional behavior. Elves lie and make empty promises (often promises of safety, on the lines of "I won't hurt you if you come out, the way I have just hurt your friend here") because they want to get at people and hurt them some more. To elves, music is fun, but torture is even more fun. There is not a single elf reported as being nice or good. They are terrific - they beget terror. They are skilled at leaving their prey (everything) alive for weeks whilst they enjoy slowly torturing it.
Elves are glamorous. When an elf is conscious, he or she is capable of making humans perceive him/her as beautiful and grand, and the humans will feel, by comparison, worthless and unimportant. Elves can also read minds. Consider the scenario: a human in the company of elves is in danger of being robbed, and then probably tortured, but a such a human also thinking bad thoughts about the elves is certainly going to be tortured. Another interesting thing is that the barriers between the elves' world and the Discworld weaken if people think about elves. Talking about elves is enormously dangerous as it brings them forth, so through the ages people have coined terms that are slightly protective, respectful-sounding, such as "Lords and Ladies", "the Gentry", "the Fair Folk" and "the Shining Ones". People are afraid even to think that elves will do bad things to them, because the elves will know. As elves ceased visiting when the barrier between worlds was strong, people were afraid to think about elves and talk about how bad they were, and as time went on, most people only remember that elves were beautiful. Folklore, on the other hand, remembers that you should not go out alone, lest the elves kidnap you, that you should leave a saucer of milk out for the Lords and Ladies, otherwise they'll come into your house and take it from you, that you hang up a horseshoe, a handy piece of cheap iron that can deter elves.
Elves have a sixth sense that is probably related to magnetism. With this sense, an elf can know absolutely, exactly, where he is. The presence of iron disrupts this sense for an elf. One elf once described being locked up in iron chains and so on as being buried alive. Elves cannot stand iron, so iron is a good thing to have handy during an elf invasion.
Elves ride on large, fiery horses tamed only by iron. As witches can ride on broomsticks, elves can ride on yarrow stalks. One of the elves' favorite weapons is bow and arrow; the copper arrow is tipped with what is called "elfstone", which renders the prey unconscious, dreaming of playing with the fairies.
Locations known to lead to the elves' world:
The elves also have a method of gaining entrance to Roundworld, as a band of elves come to that universe accompanied by the Queen to try and interfere in human history. Initial attempts by the wizards to stop them (by beating up elves with iron bars) leave humanity looking much like the N'Tuitif, but eventually the elves are driven from Roundworld with the assistance of William Shakespeare, whose play about the elves, after it is seen, makes people disbelieve in the elves (contrary to elf expectations). The inability to learn may be an Elven trait - Granny Weatherwax belittled them in the same way (referring to one as "Peasbody") to show that they are less than they are. And the power of belief on the Disc is extremely powerful indeed.
The elves are the antagonists in Lords and Ladies and The Science of Discworld II: the Globe. The Queen of the Elves (but not the elves themselves) is the antagonist in The Wee Free Men, when Tiffany Aching wittingly enters Fairyland to rescue her brother. And Rincewind mentions that he has run away from elves a few times before (but then again, he's run away from nearly everything on the Disc).
They launch another attack into the Discworld in The Shepherd's Crown, emboldened by a significant change in the magical heirarchy that occurs and a belief that the power to resist them has been fatally weakened. But this time they come up against Tiffany Aching again. An adult Tiffany coming into her mature powers and in possession of the Shepherd's Crown. The heirarchy of the elves changes too, after a coup d'etat in Fairyland. But one Elf, now an outcast, disproves the contention of Granny Weatherwax that "what cannot live, cannot learn or change" and sees a new future for her people.
Presumably though there are some elves who at least mind their own business such as the ones mentioned in Borgle's during Moving Pictures, as there was no mention of mayhem, torture, killing and all the other things elves enjoy doing. Either that, or the "elves" in Holy Wood were humans in costume. Also Nanny Ogg states in Lords and Ladies that elves living on the disc are not true elves but more like normal people with pointy ears. At some point in their ancestry a true elf had bred with a human, probably just for fun; as they do, and produced something like a half-elf (but they still called themselves elves) who inherited many of the beautiful traits but none, or little, or the malice. These may have been the elves in Holy Wood. Mankin, mine host at the Octarine Parrot in Ankh-Morpork, is half-elvish. He merely hosts Troll singers by means of aural torture to his drinking clientele.
The elves' glamour is similar to that of B- and C-list celebrities. As TP has said himself, the very idea of celebrity is almost elvish: to be famous just for being more beautiful than those around you. It is incredible just how prevalent the idea is that beauty = goodness or worthiness. And, just like the elves, many of these so-called "beautiful people" are spiteful, malicious, unhappy and vindictive or otherwise shallow.