I think where the difference lies as a whole is that Tolkien's Elves are not fairies, faeries, elves or pixies. They are Elves and are drawn from Scandinavian myth. As such, they are similar to humans, but are somehow superhuman, almost a representation of perfection. They are drawn from an idea that Elves are noble beings, beautiful and even take an interest in humans.
Faeries are different. The idea of a Faery/Fairy as a sinister and untrustworthy being comes from a different root; they are linked to the idea of boggarts, leprechauns and sprites and are a staple of British folklore.
At some point, perceptions of the two (drawn from different cultures) became combined, possibly when Shakespeare created his Fairies which seem to have characteristics of both ideas - and this was further embedded with the Victorian interchangeability between Elf and Fairy (and Pixie and Sprite...). When Tolkien (and I have to note he was not alone in doing this) 'reclaimed' Elves and made them noble beings once again he made them different to Fairies once again. And they've remained much that way ever since, with Tolkien style Elves seemingly a 'staple' in fantasy literature. I see that what Susanna Clarke has done is a similar thing for Fairies, 'restoring' them back to their more sinister origins.
Where Tolkien uses Faeries in SOWM he is using figures very like his own Elves, but the tale is written as though it is a remnant from our own world - maybe this is why he uses the word 'Faeries'? To try to link the tale to our own world? Or is he trying to distance the story of SOWM from the stories of Arda?
His Elves are clearly his own interpretation of what beings from the Otherworld might be like, developed from his own ideals of Faerie and his readings of Scandinavian and Anglo-Saxon mythology and literature. His creations are so powerful that many readers will now also perceive Faerie to be similar to his vision. Others may not share this however; I know that I perceive Faerie/The Otherworld to be quite distinct from Tolkien’s creations.
What interests me is why Fairies were ever perceived as dangerous. The natural world at one time presented greater dangers than it does today; it still does present great dangers but we have distanced ourselves from it. In order to keep children from the very real dangers of Wolves, Boars and strangers in the woods, it would be wise to prevent them from wanting to go there. With the coming of organised religion it would also be in the interests of those in power to make people even more afraid of The Otherworld. Coupled with a close relationship with the capricious natural world stories of sinister Fairies might be entirely natural to us as humans.
Yet Fairies are also enticing creatures. I think this might be due to the need to believe that as humans we are not alone. We also have Angels who fulfil this need, and in the modern age, Aliens, who are sometimes kindly, sometimes sinister. All these creatures, including Tolkien’s Elves share characteristics. They are all either unnaturally tall or diminutive, they are depicted with large, luminous eyes, either great beauty or ugliness, and they have either qualities of light or darkness.
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