The Fae is an alternate world where non-human creatures, commonly referred to as faeries, although they consider this pejorative, originate.
Discussing the Fae and its inhabitants can grow confusing very quickly, as both the realm and all of the various entities that inhabit it are referred to as "fae," but there are definitely several discrete varieties or "species" of fae, and other unique fae who appear to be a sort of nobility amongst them. Felurian seems to be one of these.
Bast states that there are no such things as demons, "there are only my kind," implying that what most common folk believe are demons are actually some type of malicious fae creatures. The Faen realm is vast and filled with factions and courts and types of beings far more varied and numerous than the mortal world, but few details are revealed about these in the Kingkiller Chronicle so far.
The touch of iron is distasteful and painful to the fae.
The Folding House Edit
In Hespe's story in the Eld, Jax unfolds a house for the moon, and end up creating a house with multiple entrances, doors and windows, with a different sky inside, on some of the windows, with a different set of stars, and with no moon. The house has rooms where it's night time, while in the same moment another room is at day time, and while in a room it may be spring, in another it may be winter.
The Folding House that Jax builds on that story is very similar to The Fae in all those aspects and, in the end of the story, Jax manages to trap part of the moon's name, making it travel between the mortal sky and the folding house, which is similar to how Iax makes the moon travel between the mortal and Fae skies.
Because of all this similarities, the folding house is probably just an allegory for the Fae Realm, so that the Folding House and The Fae would be one and the same, only described on different ways, as Hespe's story seems like a tale/myth created around the truth of the Creation War, modified through the years.
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