Some more thoughts...
I think that the Faerie of SOWM quite literally
is Tolkien's Faerie, but that's because Tolkien seems to have had a particular notion of what faerie was/is. I think that his Faerie, rather than being an Otherworld place was in fact the imagination, the realm within people. The star in SOWM could represent the imagination and the passing on of this could represent the encouragement of further generations to explore the Faerie within.
Quote:
fairy-stories are not in normal English usage stories about fairies or elves, but stories about Fairy, that is Faėrie, the realm or state in which fairies have their being.
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Tolkien says that a fairy story is not about the people who live there, but about the place. How does this square up with his work set in Arda? We do not actually get to see very much of the Undying Lands, as the books are set in Middle-earth, and we might expect that the former would be the 'Faerie' of the story.
I think the answer to this depends on how much the books are about the places or about the people. If the answer tends towards the latter then maybe the books aren't about Faerie or Tolkien's idea of Faerie at all.
Getting back to what Tolkien said in On Fairy stories, I have to note that this was his opinion on what good Fairy Stories ought to be like, and though I agree with most of what he says, it does not necessarily apply to Faerie itself. He says that 'pigwiggenry' ought to have no place in a good fairy story, but that doesn't mean it would have no place in Faerie; if pixies wished to ride around on earwigs in Faerie then no doubt they would, it's that kind of tricksy place (I should imagine...

). What Tolkien was trying to get across in his essay is that a good Fairy story ought also to be good Art, while Faerie itself would have no respect for such a notion as Art.
Amusing Footnote: I was googling for a reference on 'pigwiggenry' and only about 14 entries came up, one of which was the latest canonicity thread on the Downs. Hmmm....