European folktales (the fictional oral novels of the folk) and legends (stories told to be believed) included only those entities that were part of the belief system at the time. One could look backward and say, "well, that appears to be like an extraterrestrial, and therefore that is what is being described." But that is as flawed as saying that today's UFOs are evidence of traditional supernatural beings. They are based on similar unusual (but not necessarily unnatural) phenomena.

Here are a few paragraphs from my draft Introduction to Folklore that may help address this question; the response of the Irish woman is key - people don't tell stories about entities that don't recognize:

Pilots during World War II described a series of unusual apparitions that people sometimes jokingly said were supernatural. They called phantom lights in the sky “foo-fighters,” and disappearing tools and quirky failures of machines became the word of “gremlins.” The unusual circumstance of some of these phenomena attracted attention. After the war, the sightings of UFOs – “Unidentified Flying Objects” became extremely common, but they did not immediately become part of a systematic, widespread belief in the supernatural.

Beginning in 1946, sightings of UFOs multiplied rapidly, and the belief in alien visits to earth became a cornerstone of modern North American folklore. While the belief in these creatures is widespread internationally, it was not universal. In 1982, I was interviewing an Irish woman who had seen banshees and believed resolutely in the fairies of Ireland. When I asked if she believed in UFOs, she answered, “Oh, that’s what you Americans believe.” She then laughed derisively.

In fact, the alien has taken the place, in many respects, of the supernatural beings of nature. The modern “little green men” abduct people, fly around in the night, and leave rings in fields. The similarities shared by elves and aliens could be the result of two causes. They are either die to transference of older motifs to the newer idea of aliens, or they are a new interpretation applied to similar, unusual phenomena, resulting in a parallel tradition.

It is clear that people apply extraordinary explanations to things that are not easily understood. If a person believes in elves, then the rush of something unusual across the night sky, a brown circle in a field, or the unexplained disappearance of someone can all be attributed to the supernatural owners of nature. If the modern, technological, literate society extinguishes the belief in elves, it opens the door to the idea of space flight; people in this modern world can imagine extraordinary traveler whose abilities make them nearly supernatural. It is easy, consequently, to look to aliens to explain things that seem beyond our ability to comprehend with more normal explanations.