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There are many theories as to the origin of the FaeryFolk and much lore has come down to us concerning their nature and behaviors. Whatever one believes of their nature and origin, they are noted to be attuned to the land and live in the Underworld, which they enter by mounds known as Sidhes. These mounds are their dwellings (as are other underground spots such as caves, caverns and hollow hills) as well as entrances to deeper parts of the earth. Faeries are said to change residence at every quarter - thus reflecting the change in the seasons and within the earth. The "quarters" referred to in this case are actually what the modern pagan traditions refer to as the "cross-quarter" days - Brigid, Beltane, Lughnasahd and Samhain.
The Underworld is also said to be the dwelling place of the Ancestors and in Celtic legend and lore there was not always a big distinction made between the faeries and the ancestors. It was often thought that the dead went to live in the "Blessed Isles of the West," often referred to as the Land of Summer or Summerland. These Blessed Isles of the West were also held to be the original home of the Shining Ones of Old - the Tuatha de Danann. One of the Irish legends states that after the defeat of the Tuatha at the hands of the Milesians, the Tuatha were banished to - or chose to take as their domain - the mounds and the hills: that is, the places below the surface of the earth: the Underworld Realm. This brings in the connection with the faeryfolk - whom some say are the Tuatha de Danaan.
Of all the nights of the year, it is only on Samhain that the sidhe mounds, hollow-hills, caves and caverns are open and the treasures of the sidhe can be seen. All the spirits are abroad this time of the year - ancestors and other ghosts, pucas, faeries and hosts of other Under and Otherworldly beings. The Sidhe-dwellers were considered by the Celts to be the rulers of Samhain and of the other spirits at large at Samhain. The costume aspect of Halloween/Samhain might possibly come from the custom of "Ritual Disguise." Only those in disguise would dare venture out this night, their disguise designed to confuse the sidhe dwelling faeries, who along with the revered, but sometimes feared, ancestors, were abroad on this night when the veils between the worlds were so thin as to allow easy passage between them. A Samhain feast was held with special foods and the hearth was prepared for the visit of the Ancestors. Food was left out to propitiate the spirits. In some parts of the Celtic world a place was set for them at the family table. Samhain is a night to honor the ancestors, and the Tuatha de Danaan, and the dwellers in the sidhe, who may, after all, be one and the same.