on the evolution of fairies, i think it should be acknowledged that there are more ways to survive than thick muscles and brawn. nature has evolved perfect hunters, perfect defenders, what about perfect hiders? the fairies are fast, nimble, able to evade any predator, and clearly they are adept at hiding. it is probably only the presence of children (who resemble them more than adults) and likely girls (as fairies do tend to appear feminine) which lure them out as, compared to grown humans, they seem less alien.
fairies could indeed happily evolve. personally i think they would share a common ancestor with humans, and adapted more for speed and stealth, and possibly intelligence, than the brawn of the great apes. i can see how insects could also be responsible, however.
unfortunately, like birds, it seems likely fairies would have hollow and fragile bones, so any fossils will be incredibly hard to find, especially considering that fairies enjoy hiding themselves.