The original terms for these (at least, in Scottish lore) were the Seelie (vaguely goodish) and the Unseelie (Always Chaotic Evil). In Ireland, they were called Aos Sí ("ace shee") or Aes Sídhe ("ays sheeth-uh"), meaning the "People of the Mounds," and would sour milk, kill animals, and swap people for changelings. Boys were dressed in girls' clothes until the age of 5, because otherwise the sidhe would steal them for their armies. Building anything near a fairy fort was very bad. Going alone into a marsh was an invitation to get entranced by a Will-o'-the-Wisp into their halls. Even if you were allowed to leave their kingdom, you could find that centuries have passed, and crumble into dust. Their dances would catch any human passerby and make him dance to exhaustion—at best.
It's worth noting that Tolkien's mostly good Elves owe more to general Norse Mythology where elves did very little of anything and were not very frightening compared to a slew of other monsters. In other modern literary fiction and folklore the Fae were generally depicted as neutral at best, and close to demonic at worst. There were stories of entire families being wiped out for daring to build their house across a fairy path, and Franz Bardon also wrote of how gnomes and undines (water spirits, essentially mermaids) would try and trick any magician who summoned them into Faustian pacts.
A variety of superstitions developed to keep the fairies at bay, or to pacify them. Salt could keep a baby from being stolen. Iron, holy water, crosses, and holy words/names scared fairies away. Depending on the version, they may also hate the sound of bells—whether it's church bells or any bell-ringing at all also depends on the version. Some people put out offerings of milk or food for them at night. Even food offerings were a dangerous idea, however; because while some of the Fae might start doing housework during the night in exchange for the food, they would become very angry and do the opposite, if they had become used to receiving food, and there was a night when none was left for them.
Then came the Bowdlerization, and suddenly, all Fairies got a lot more cute. (And acquired wings, which were unknown in older folklore.) This began in Elizabethan times, where on one occasion a woman who claimed to commune with the Queen of Fairies was burned at the stake as a witch. It is not for nothing that William Shakespeare has Oberon explicitly disclaim that he doesn't mind church bells—to show he was not a demon. It accelerated thereafter, resulting in the Victorian image of fairies, which is generally how they are popularly conceived today.
More traditional fairies are a bit of an odd duck of a trope. Old as anything, long forgotten, they're starting to re-emerge in modern fiction with a vengeance. Fairies may present themselves as amazing, beautiful, graceful and magical—but underneath all the glamour, they're creepy little buggers for whom empathy is a concept as alien as the idea of blue as a number. They might take a shine to humans, but at best, it's the love a human feels for a pet, and descends down through the love an entomologist feels for a rare insect, continuing down through the love a glutton feels for prime rib and you really don't want to see what it's like at its worst.note
Their society and customs, if they even have the inclination to associate, are often extravagant and elegant but amoral and inscrutable, sometimes even for some unfortunate Fairies themselves. It's by far not certain what degree of loyalty or compassion they feel for their conspecifics.
The return of this trope to popular awareness can be traced back to at least 1988, when The Sandman, a Comic Book penned by Neil Gaiman, featured a number of Fairy characters who were often either outright malicious or self-centered to the point of sociopathy. Gaiman also used traditional Fairies in his novels and short stories as well as other comic books, and directly inspired authors such as Terry Pratchett (a friend of Gaiman's in long standing) and Susanna Clarke, author of Jonathan Strange & Mr Norrell. Ten years earlier, the artist Brian Froud did a series of illustrated books cataloging the Shee or bad fairies, and their close cousins, the goblins. He also worked with Jim Henson on The Dark Crystal and Labyrinth, the latter of which featured the Goblin King as its villain.
These Fairies can sometimes share a world with Tolkienesque Elves, who, depending on the setting, may not themselves officially be part of Faerie. The principal distinction between the two nowadays is that Elves are a mildly superhuman longlived race living in the mortal world (or a distant corner of it), whereas Fairies are much more intensely magical, and live in a Fairyland outside the mortal world.
Ever wonder why Fairies are called "the Fair Folk" or "the Good Folk"? It's for the same reason the Furies of Classical Mythology were called "the Kindly Ones"—because calling them an unkind name is a good way to bring down their wrath upon your head. Especially The Wild Hunt. In addition, simply using the word "fairy" is considered insulting. (It's not clear why. The popular theory is it's like calling a human an ape.) On the subject of names, there's a 90% chance that a named fairy leader will be called Oberon, Titania or Mab. Other fairies are just as likely to have names drawn from A Midsummer Night's Dream.
Anything the Fey do "for" a mortal or that a mortal takes from the Fey must be returned in kind; by their standard (which is often fatal or worse.) This could mean their hospitality, their food, or aid (they are the ones who determine the exchange rate). Many will trick mortals into this trap. For this reason the words "Thank you" are considered insulting and alien to the Fey. Words, or even feelings, generally are not equal to actions to them; and few can recognize good intentions, let alone choose to.
- Iron: Sometimes it means striking them with iron weapons, or simply a frying pan or just exposure will do the job. In some settings where this would be too much of a Weaksauce Weakness, it's specified as Cold Iron, whilst in others steel may have the same effect. What this actually means varies, as does how effective it is.
- Cannot Tell a Lie: Sometimes. Note that they will exploit and twist this for all manner of deception, but a trickster hero can take advantage of this. They are also well known for Rules Lawyering and Loophole Abuse.
- Magically Binding Contract: Related to the above. Any deal with the Fair Folk will be upheld from their end, though they tend to respect only the letter of any deal they make. God help you if you fail your end of a deal in any perceivable way. (God help you even if you don't!)
- Pride: That bit up there about how they demand to be called the "fair" folk? They're all like that. To a one, they are proud creatures, concerned primarily with their own grand schemes.
- True Name: The idea of a "true name" has started resurfacing where discovering a fairy's name will either give you power over it (à la "Rumpelstiltskin") or can kill it. It varies whether knowing the name is enough or whether you have to use it all the time. Note: This does not make the user immune to chronic word twisting.
- Must Be Invited: In older myths, a faerie could not enter a house unless invited. As with above, loopholes apply.
- Music: Not the magical variety, but elves are often presented as being fascinated to the point of distraction with human music. This is sometimes tied into the idea of Creative Sterility, that they cannot make their own music.
- Bread and salt are symbolic across many cultures of Sacred Hospitality, and often invoked to ward them off. The two main variants are that bread and salt symbolize civilization and fairies are literally weak to bread or salt, so people would carry some around or eat some before traveling. The other variant is that The Fair Folk will reward and protect people who give them aid in times of need. Even fairies have some sort of morality, after all.
As a final note, a hypothetical response to their negative depiction in this article from the Fae themselves would likely be that their malevolence towards humanity is generally motivated primarily by Gaia's Vengeance, as a result of the amount of environmental destruction that has been caused by post-agricultural humans, particularly over the last 200 years; in other words, if we clean up our act, they'll clean up theirs. Of course, given that the human tales depicting fairies most harshly date from pre-industrial times, the veracity of any such excuse would be every bit as questionable as that of anything else one of the "fair folk" might ever say, and, in general, you'd want to keep your crowbar handy.