Alfheim is often referred to as Fairyland, the home of the more chaotic elven spirits who worship Frey, the ruler of this Realm in Ysgard. The elves here glow with an inner light, and cannot be blinded.
Alfheim is wild, bright, beautiful and full of joy, but its winters are hard, and during those months the elves retreat to glittering caverns under the hills.
Alfheim is a realm separate from Asgard. There is a chasm between the two realms that is widening by a few inches per year. This chasm is several miles deep, but is still sealed at its base (it is not yet bottomless, which is a real possibility given Ysgard's geography).
Many portals to Arborea are located in Alfheim, and Aerdrie Faenya's realm often slides here. The portal to Alfheim in Arvandor is called Ingmar Brook.
Sources:
Planes of Chaos, Book of Chaos, pages 109-111
Manual of the Planes, first edition, page 95
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