Most likely the fae were Homo floresiensis or a similarly sized cousin who had emerged from Africa before us and had a head start.
There's story that fit the fae almost all over the planet: small, connected to nature, intelligent but incomprehensible, speaks in tongues at times, enforces "totally random" rules very strictly, even as far as making weirdly specific "laws" that could result in marriage and potential offspring that shares traits of both parents...
The few places they arent evil or treated like a Boogeyman, is the ones were similar people were slaves or "helpers". But in all stories they were capable, self sufficient, and human like. They just weren't tall and looked "off".
But in all cases, eventually with the spread of humans they were pushed out, retreating away from humans.
It's way more logical than the only thing remembered about AI has nothing related to AI by any logical stretch of the imagination