I'm English.
I have not heard of this, which doesn't mean a great deal since folk beliefs can take many different forms, and not all the permutations are recorded. Two observations are appropriate, however: this is in keeping with the English (and especially southern English) beliefs, and secondly, one should never be surprised when individual expressions of creativity employ popular belief while reaching beyond the traditional range of motifs common to the whole.
A third observation is that this idea is a bit on the cute side - and certainly it employs a petite image of the fairies. The idea that fairies are excessively small was at its strongest in the southwest of Britain - in particular in Devon and Cornwall. Because of popular literature from that region, particularly thanks to the pen of Anna Eliza Bray (1789-1883), the image of small cute pixies became commonly known throughout English Victorian society. This caused a secondary tradition to form in England that was often not grounded in local pre-industrial folk tradition, but rather in a literary-based mutation of local beliefs and traditions.
Hiya!
I am indeed familiar with a tale of the Isle of Wight Ferry, which was known, on particularly ominous and stormy nights, to disappear from its mooring. On these nights, local residents sometimes reported the two hundred and ninety ton ferry splashing merrily in the ponds that would form in the streets.
(I saw that first post! In fact, Reddit nearly ate this write-up because you swapped threads. :P)
More seriously, after searching through a few books of fairy tales and folklore,^1 ^2 including an 1890 article that was half indecipherable but a great deal of fun, I wasn't able to find any specific description of the story you describe in any of the tales. If you'll permit common sense (there's academia to back it up, promise!), this sounds easily like the sort of tale that a parent might make up for their children.
Of course, although this might have been made up by your grandmother, there's the question of 'why?' What association does English culture hold, so as to make fairies a go-to story and to maintain such a rich folklore history? The answer I found, though certainly far from flawless, comes from Minnie H. Swindells' "Fairy Tales as Folklore,"^3 a 1934 discussion of the motives behind fairy tales. The article, though fairly racist, does lay out a few interesting (and entertaining, after my recent binge on Jonathan Strange and Mr Norrell) descriptions of why fairies and fairy folklore come to hand so easily even when we have rational explanations for events to which we attribute them. As to why a parent might explain ripples in the water during rain as tiny fairies, or entertain a child with the story of Puss in Boots, Swindells says the following:
"What does it signify? Just this. The desire of the child for a story is but the echo of an instinctive cry that comes from man through the ages; man in the most primitive society; man in the age of barbarism; man in our own era of scientific marvels. Man has always craved 'A story.' "
Swindells argues from a belief of Civilisation as a progession, and links the appearance of fairy tales to prime-evil/'savage' beliefs. I'm not at all fond of that interpretation, but I do find the following passage both convey's Swindells' argument and also gives a fascinating insight into why fairy tales continue to be told, as opposed to why they arose.
"...We shall use the term 'fairy tale' to mean that great number of traditional tales which have been handed down from time immemorial, those tales which were, in a sense, never written, but which simply evolved. Many of them existed first as myths, believed by those producing them as explanations of the phenomena of life and nature evidenced on every hand but little understood by the simple savage mind. These crude beliefs carried over into a higher stage of culture in the peasant lore of the people, were transmitted orally from generation to generation and, while not actually believed, were yet accepted as part of the great mass of superstitions which characterized the thought of the peasant class. From this source they became the literary heritage of the race when a written literature became possible."
If you strip away a great deal of racism and class-ism, I actually quite like the point being made here - though I'm skeptical of the idea that our ancestors would ever truly believe that, for instance, ripples in a rainstorm would be the activities of fairies, I find a lot of credence in the statement that they continued to be shared not because they are believed, but because they are a tradition - and as a result become become further ingrained in cultural heritage. Swindells argues - with more complicated stories than yours in mind - that fairy tales continue to be of interest because "[fairy tales] contain elements which are survivals of primitive beliefs and practices of our far away ancestors and which reflect accurately their tribal rituals, customs, and organisations." Personally, I prefer to believe that we love them and share them for no more complicated reason than 'Man has always craved a story.'
A big thank-you to /u/itsallfolklore for helping out with this post, which is outside my usual element! :)
Sources:
Perhaps you can let us know the county where your grandmother was born - and the year of her birth would be of interest as well. Thanks.