Comment by pea

I think it makes sense given the following:

- Your brain has been trained extensively to recognize faces / people. Even very small babies can do this.

- Your brain processes a large amount of mostly noise, and sometimes mislabels noise as objects, which trends towards face-like things (see: seeing faces in clouds, people in shadows etc.) Various classes of substances make this effect more noticeable (even stimulants, including caffeine)

- The jump from that to 'elves' is largely just cultures have some form of small magical person.