I've endeavored to make elves in the 10th Age, like all of the races of Arunia, extremely archetypal. The problem with that, of course, is that people will simply write them off as "just another take on elves," perhaps even muttering "this one's not that far from Tolkien." And that's ok, because for me the devil's in the details. I want my fantasy races to feel like the ur-races and yet be unique in their particulars. I want people playing the 10th Age to think of the elves like they would think of all elves, to say to me "Josh, your elves are particularly elvish, they're packed with the stuff that makes elves elves." So that's what I strive to do. That, and to strongly differentiate the demihuman races from humans because otherwise they're just tall people with funny ears or, in the case of the smallfolk, short people with funny ears.
So when I went to design elves for the setting, the first thing I did was take into account the various weirdnesses about them mechanically. I altered some of their powers and gave them a social reason for knowing how to use swords. I divided them up into groups and gave the different social formations different bonuses. But the most interesting fact about the elves wasn't that they could get a +1 to hit with a sword or sneak in the woods. It was that they don't sleep.
The idea for elves was to hew closely to the model presented by Tolkien but also to draw in some of the Fair Folk stuff from real Germanic legend. Yes, there are a separate class of races that make up the REAL Fair Folk in the 10th Age—you can't really be expected to play one of those weird and unpleasant trickster things, so I've grouped together pixies, nixies, sprites, griggs, atomie, leprechauns, and other such creatures as the ones that will ask you to have a cup of wine and end up putting you to sleep for ten centuries.
But the elves needed to have some of that in there too. So elves are like eternal children in Arunia. They contrast nicely with the dwarves, who begin and end their life as old codgers. This is one of the reasons why dwarves and elves have a slight (but not overwhelming) antipathy. Elves like to laugh and make fun, dwarves find it offends their sense of gravity. Again, there is definitely Tolkien at play here. But elves aren't all love and laughter. They start their lives full of vim and vigor, throwing themselves fully into any and all endeavors... but as they grow older, they begin to experience dark spells that last for longer and longer until they enter melancholy and depressive moods that eventually lead to their desire to abandon the Middle World.
Not being able to sleep or to dream has a lot to do with this. Taking another page from Tolkien, elves who choose not to abandon the Middle World eventually burn themselves out. Their desires overwhelm their bodies, they go completely mad as they fill with century upon century of sorrow, and their souls (reified matter in the 10th Age, a-la some ancient conceptions of the soul... another post, another post) form a permanent bond with the Negative Material Plane. Their bodies are effectively consumed and they wander as "houseless spirits," unable to distinguish between the past and the present.
Elves only meditate for 4 hours a night, which is a great bonus for elven watchmen and wizards. It also means that the elvish day is much longer than the mannish one. While most men wouldn't waste oil or tallow to stay up late at night, elves are much more likely to see a good reason to, since they don't need to sleep for 8-12 hours, but rather 4-6. They still have beds, which they use to couch themselves in their reprieve when at home, but they can meditate just as easily with their legs folded beneath a tree.
What do they see while they close their eyes? Not dreams. No indeed, they relive moments from their past, digesting them and absorbing them into their being. They re-experience joys and traumas. One of the reasons that they eventually go mad is that they are privy, simply, to too much life. Their cup runneth over with sorrows that a mortal frame simply cannot contend.
They are powerful poets, artists, architects, magicians. They are secretive forest dwellers who enjoy a good joke, but also who keep their passions in check with an intricate etiquette and games of double meanings and inference. They are all free; not one elf is a bondsman of another, all serve on their own. They call each other ilmai instead of goodman, which means, essentially, "free elf." They do not have peasant levies, but rather trained citizen-militias. All elves know how to read, write, and to hold a sword. And yet they are stalked by their pasts, the memories they cannot forget even if they wanted to, unable to find oblivion even in the simplest and most comforting place: sleep.