By "fairies," I'm referring to the eldritch horrors and creepy-crawlies of Celtic folklore, not the glittery pixies with butterfly wings.
My urban fantasy setting puts a sci-fi spin on supernatural creatures. The Good Neighbors of Celtic tradition belong to a hominid subfamily called Externinae, which predates humanity and includes banshees, gancanaghs, dullahans, etc. Early on, they adapted to life in a parallel universe, where they underwent numerous bizarre transformations. They can harness electromagnetic forces through supernatural means, which they use primarily to create illusions and prevent people from noticing or remembering them by disrupting neural activity in humans.
The reason I decided to make them a group of hominids is because there's quite a bit of folklore where the Fair Folk mate and produce fertile offspring with humans, meaning there must be a close genetic relationship. I know both parents usually have to be the same species, but inter-genus hybrids exist in reality and, as evidenced by the wolphin, can be fertile under very rare circumstances. Alternatively, I'm thinking of having the fairies be a genuinely alien group of organisms, some of whom have made themselves genetically similar enough to humans to allow for crossbreeding. Of course, they'd need a reason to do this.