I remember reading Michael Newtons journey of souls. Where he states that he believes that fairies, elves, & all those other mythical creatures are memories of peoples past lives on other planets. Could this be true? I think it makes sense.
I think it is valuable to note that he "believes" what he says to be so. The fact of the matter is that we have absolutely no way to prove his belief to be right or wrong.
In this vast Universe I suspect we would be very self-centered to believe that Earth is the only planet on which life evolved. But to date we have found no planets that would sustain life as we know it. There is a supposition that Saturn's moon, Titan, might harbor some sort of living microorganism, but certainly not more complex life forms.
Until we actually discover a planet and find living creatures such as elves or dwarves, there is no way to prove his theory one way or the other.
i heard something similar but it wasnt limited to faeries and mythological creates but also stories, songs, even tv shows and cartoons. i dont know if id go that far with the theory but i think its pretty interesting. like lark said though we wont ever know until we find other worlds with those creatures on it.