Originally, this word was used to describe all kinds of fairies, especially tiny humans. In England, the word elf was used for fairy boys. Elves are sometimes described as being good, but are often described as causing trouble for humans. They live in forests and woods. That is just one kind of fairy.
Fairies are different in many ways.
Fairies can be good to humans, or bad. Fairies can be very tiny, or very large. This word is used to describe small, stocky little people who are earth spirits, and can be found underground or near rocks. They're related to dwarves in that way. In recent times, the most popular gnome is the cheerful garden gnome, a white-bearded fellow with a red cap and a smiling face.