The little people crop up a lot in myths. I've talked before, in passing, about the possible origins of elves, goblins and fairies (although I wish I could find a reference for the fairy being a warning about getting drunk on cider), but this almost feels too literal: New types of person to explain rare neurological conditions, or encode cultural knowledge? Unlikely. Nor is it likely that these are stories of different homo species--not on this timescale, anyhow.
Yet... yet... what if these myths are of some other kind of human, and one of the ways the myths have survived has been by becoming vehicles for other bits of knowledge that aren't large enough, independently, to all form their own myths? (Like, don't get drunk; sometimes people are born with different mental setups.)
What if the little people really were little people: Children. I've been reading Collapse of Complex Societies (Joseph Tainter). Great book, and full of information and reviews of many more societies than I realised existed. It's a compelling argument that complexity growth is a cost reducing exercise in certain circumstances, and collapse is what happens when those circumstances change in certain contexts--although I thought the hypothesis itself falls victim to a number of criticism Tainter makes of other theories. One society mentioned is that of the Ik, in northern Uganda, who have experienced one of the more severe collapses known. They display almost no integration, with sharing nonexistent even among kin. This stood out:
Children are minimally cared for by their mothers until age three, and then are put out to fend for themselves. This separation is absolute. By age three they are expected to find their own food and shelter, and those that survive do provide for themselves. Children band into age-sets for protection, since adults will steal a child's food when possible.
The human brain is still measurably evolving, in the last 10,000 years or so. What if the myths are carrying information about that? What if the family unit evolved in the human brain comparatively recently, more recently than the rudiments of language? (Families are now a human universal.) What if, when the people who become the Celts moved to northern Europe as the glaciers pulled back, travelling with their families, there were already people on that land, people who hadn't developed families yet?
What if the goblins were bands of teenage boys, and fairies and elves were groups of young children? They would scatter and vanish when adults came along, and perhaps speak their own, temporary language--a group-size idioglossia, a standing wave of language that was acquired as children moved into the group, and forgotten as they moved out.
These people would have been displaced (well, replaced) by the family-using immigrants, but remembered in myth, the powerful stories passed down through the Holocene.