'Elf-counsel' or 'Elf-wise' are just translations of the Old English Ælf-ræd from which we get 'Alfred'. They're the literal meaning of his name, rather than a title; see also Æthelræd (nobly-wise) or Alfred's granddaughter Ælfwyn (Elf-like beauty).

Elves are a relatively common phenomenon in Anglo-Saxon folklore. They are typically creatures of great wisdom and beauty, but were also wily, capricious and dangerous. Belief in them was fairly widespread: cures for Elf-magic even appear in 9th Century medical textbooks.

That is a literal translation of his name! Ælf + ræd/rēd "Elf + counsel". Similarly, Æthelred is "noble counsel".

Ælf - names are not that rare in Old English! Alaric Hall (2006) notes that there was probably a personal name that was simply Ælf and a second one that was Ælfa. There's also Ælfwine (modern English Alvin), "Elf-friend" and Ælfheah (a bishop who died in 1011). I'm sure there's more that I'm forgetting, too.