Faerie : from the Latin term for "fate" (fata), faeries (or fairies) are a "host of supernatural beings and spirits who occupy a limbo between earth and heaven" (Guiley). This is in recognition of the skill faeries had in predicting and even controlling human destiny. Faeries could be either good or evil creatures, and at various points in history have been confused with witches and demons
Fay or fey is the archaic term for faerie meaning bewitched or enchanted. This word derives from 'Fays' meaning Fates, and thought to be a broken form of Fatae. 'Fay-erie' was first a state of enchantment or glamour, and was only later used for the fays who wielded those powers of illusion. The state of enchantment is fayerie, which became fairy and faerie.

faerie at Monstrous.com