The term Faerie is derived from "Fé erie", meaning the enchantment of the Fées, while Fé is derived from Fay, which is itself derived from Fatae, or the Fates. The term originally applied to supernatural women who directed the lives of men and attended births. Now it has come to mean any supernatural creature tied to the earth, except monsters and ghosts.
In Ireland, the Faeries are called the Aes Sídhe (singular Aes Sídh). Sídhe happens to be the name for the earthen mounds and hills that dot the Irish landscape. Irish mythology, legendry, and folklore claim the Faeries live under these mounds, so the term "sídhe" has come to mean Faerie in general, but it more properly refers to the palaces, courts, halls, and residences of the Faeries. However they are known by a wide variety of euphemisms, including "the Fair Folk", "the Good Neighbors", "the Little Folk", "the Little Darlings", and "the People of Peace". This is done for two reasons. The first is to avoid attracting their attention and the second is to avoid insulting them.