Well, i don't know much about fairies - at all, but i've heard things from accounts of my irish and celtic friends, this whole subject intrigues me! Mainly the part of them being actual living creatures. The folklore is very true for them, they believe there are an actual race of magical people, they even believe in little people and other things, the cool thing is theres been many sightings and documents. Apparently they are helpers of the earth, and many of them have human like characteristics because of being such on an earth level realm, OR being living beings, many fairies are known to be like tricksters, this is the part that i am highly interested in. Some of them have gotten a bad name for their trickster human like ways.
It's not as much as it is believed they are spirits, as much as they are believed to hide well, and have abilities we do not, such as being able to disappear, and magical powers that make them seem like spirits. Apparently, they are like a race that has evolved higher than us, or have stayed that way since ancient times, i don't know. But it's not as much as they are from the spiritual realms like some type of angel in spirit form, that they are like their own race and work for the earth and spiritual realms and have magnificent spiritual powers.
I may get spazzed at for this, but i totally believe it's possible that all the sightings of creatures around the world, documented things, could be that there are other creatures and races in this world that we don't know about, they hide from us and just have evolved into states of being much more high frequency than we are. May not understand how they got that way, but many people believe they are living.

For example the Big foot people. All the sightings of big foot beasts, yet they are actually believed to be a race of people that have evolved and are very sacred, and have spiritual powers, according to native americans. Big foot people used to live amongst the people, they are distant relatives, and many native americans still work with these magical beings. They aren't spirits, they are living, but they have evolved way faster than anyone, and can become invisible, shape shift, and are not a threat, but they are forced into hiding.
I know most people probably resonate more with fairies being some sort of energy or spirit, but i think it's also possible they could just be. Why not? Perhaps spirits which just take solid form?