Small Elves are the Best + [Class] Elf

Forget everything you know about Elves. Any while you're at it, throw out dwarves, hobbits, and gnomes too. Mix them all together. This is now one race. Elves are no longer Legolas, they're Keebler elves, or Santa's elves now.

Elves are small, sneaky, magical, and crafty. In a more folkloric setting, they usually try to stay hidden from humans as humans might enslave them or use them to craft magic items for them. In a more high fantasy setting, elves can be found working all sorts of crafting and scholarly jobs that don't require much strength or height. Elves are immortal; at least from the ravages of time and most earthly diseases. Some Elves are as old as the trees, and some are even older.

All Elves wear hats. Some go with the classic red conical gnome hat, but many go with soft caps, pointy wizard hats, or feathery headpieces. Something like a hood or circlet can also work as a hat, but without a hat the elf cannot use their innate magical powers. If you manage to steal an elf's hat, you can force it to work for you. Elves can only have one “main” hat at a time but can create a new one if enough time passes and with the right magical rituals.

If your game uses race AND class, then Elf hats grant the elf their innate magical powers. While wearing the hat they get +1 to reaction checks with the creatures of the earth, wood, and sky. This does not apply to domesticated animals, which view humans as their rightful masters and are too separated from the wild to respect an elf. The most powerful ability of an Elf's hat is the ability to make the elf disappear. As long as they wear their hat, the elf can suddenly disappear from the location they are at, and reappear somewhere else nearby. They can do this the moment someone is not directly watching them, even blinking, flinching, or looking away for a split second is enough time for an elf to disappear. If they do not have their hat, they cannot disappear. Elves can also shrink while wearing their hat, and can change between 3 ft tall or the size of a mouse. Also, Elves are shit at fighting and get -1 to their to hit and strength due to their small size and are best suited to stealth or magical classes.

If your game uses race AS class, then here it is.

Elf + Fairy Companion

Elf

HD- d4

Equipment- Small, untrained. Daggers, short spears, light armor. Max AC is 12

Elves are small, fair skinned humanoids closely related to fairies. They live forever unless killed, and have magical powers. Most live in hidden forest glades in squat houses, underneath the hills or within the mountains, and some even live in hidden places in human dwellings. Elves are small and physically weak, meaning they get -1 to their strength modifier. While being physically weak; Elves can do fine with ranged weapons like blowguns, slings, and little elf bows. Elves are small and deft to compromise with this weakness, and get +1 to skill check rolls every level. If an elf wears their hat, they can safely interact with wild animals equal to their level or less in HD without it becoming aggressive or angry as long as the elf doesn't hurt it. This also allows the elf to do things like build homes inside of aggressive man-eating trees and such.

Elves have the power to disappear. As long as they wear their elf-hat, they can disappear from a place and then reappear within 5 rooms or a few yards whenever they choose. The maximum time they can disappear at once is up to their level in turns. Elves can only disappear if nobody is directly looking at them or they hide behind something for a split second. Once an Elf reaches 8^th level, they can disappear at any time; such as right before getting hit by a sword swing. Elves can only disappear once per day. Elves can also shrink when wearing their hat; once shrunk they can do a maximum of 1 damage and only have 1 hit point per level. If their hat is removed while shrunk they return to their "big" size and cannot shrink again, but with their hat they can stay shrunk as long as they want.

Elves also have the power of craftsmanship. An elf can craft without their hat; which is why many elves are afraid of being enslaved by other races. Elves can repair or craft regular supply items and equipment much faster then a normal human. It only requires 1 turn for an elf to craft a pair of boots as long as they have leather, a needle and thread for example.

At 10^th level, the Elf becomes an Elf Master. They can now forge minor magic items from scratch with the appropriate materials. These items are regular tools and equipment enhanced in some way over a standard version of that item. For example, an Elf Lantern may be able to be used underwater, or Elf Shoes may let you walk on thin tree-branches without them snapping from your weight. It takes one season to create a single minor Elf item, with more powerful items requiring longer or special reagents found in the woad.

The Elf Master can also create their own elf hollow; a secret place where they live. If they already have a hollow it is used instead. The hollow is automatically protected by magical enchantments and illusions that turn away and deceive anyone, making it impossible for anyone who is not also an elf or someone who has already been to this hollow to find it. The exception is a regular lost child, who can accidentally find the hollow if they aren't looking for it on a 1 in 20 chance. The Elf Master also attracts some lesser fae; 1d6 Elves, 2d8 Brownies, and 1d4 Fairies come to live with them.