Basically, the title. Europe is full of legends about fairies, gnomes and such, but these kinds of legends and especially the respect for the fae are very prevalent in Ireland as a part of their culture to this day, and I've always wondered if they started to be this prevalent after two very differently ethnicities came in contact and one prevailed. Is there any archaeological or historical evidence of this? Did the Celts coming from mainland Europe entirely integrated with the "first" Irish people who already lived on the island? Were the two groups very different genetically/aesthetically?
Ah so you’ve come across something influenced by the Lebor Gábala Érenn! Or in English, the Book of Invasions. This 11th century Irish text tells of successive waves of invaders, each defeating and replacing the last, ending with the Gaels driving the Tuatha de Danaan underground. However, the Book of Invasions is no longer considered a reliable historical source (apart from what it reveals about the 11th century!) It was written in a period when people were attempting to reconcile pre-Christian beliefs and practices with Christian beliefs and practices. The Book of Invasions makes specific references to the Old Testament in ways that are meant to tie Irish history with Biblical history. Neither book can be read as a literal historical account.
The modern consensus is that neither the archeological record nor the genetic data support the idea of successive waves of invasion of Ireland. However, you will still find a lot of pseudo-history out there that draws on older theories that took the Book of Invasions literally.
I know this is r/AskHistorians and not r/AskFolklorists, but folklorists would generally caution against this kind of explanation for folklore. You can indeed find stories of fairy encounters from 9th century Ireland, 17th century Ireland and 20th century Ireland - but the reasons why people told those stories and how they understood them are affected by changing cultural contexts. Stories serve many different purposes and the same imagery can have many meanings. Look at vampire lore in the last century or so - they have functioned as metaphors for sexual desire, wasting diseases, STIs, addictions... All of those things and more swirl around and inform our vampire stories.