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Cryptid comparison
(media.kbin.social)
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Icelandic folklore doesn't have fairies, we have elves.
Also there's some very disturbing Icelandic cryptids, like Jólakötturinn, a giant cat that eats children on Christmas, and Nykur, a backward-hoofed horse that hypnotizes you to ride it and then it walks you into the sea.
Your elves that live in tiny houses under the hills?
Those "elf houses" is actually a more recent thing we do for tourists. But according to folk belief, the elves live inside certain rocks and cliffs. Some road constructions have been derailed because an elf rock was in the way and the people were having none of that.
Well, obviously those aren't their real houses, they're above the hills, not under them.