Huldufólk – The hidden people
From WIKI: In Icelandic folklore, the Huldufólk (meaning hidden people) are like elves. These beings are also said to be very similar to human beings, and live in little houses in the rocks. Although the Huldufólk are usually hidden from the view of people, some humans are believed to be privileged enough to see them.
In Faroese folk tales, hidden people are said to be “large in build, their clothes are all grey, and their hair black. Their dwellings are in mounds, and they are also called Elves.”
Some Icelandic folk tales caution against throwing stones, as it may hit the hidden people.
The term huldufólk was taken as a synonym of álfar (elves) in 19th century Icelandic folklore. Jón Árnason found that the terms are synonymous, except álfar is a pejorative term. Konrad von Maurer contends that huldufólk originates as a euphemism to avoid calling the álfar by their real name.
There is, however, some evidence that the two terms have come to be taken as referring to two distinct sets of supernatural beings in contemporary Iceland. Katrin Sontag found that some people do not differentiate elves from hidden people, while others do. A 2006 survey found that “54% of respondents did not distinguish between elves and hidden people, 20% did and 26% said they were not sure.”