Fairies are usually described as smaller than people and having an appearance which brings fear or awe.
The features attributed by Scott to "the modern fairy" (as opposed to elves of earlier times) are:
Their attributes, amongst which we recognise the features of the modern fairy, were, supernatural wisdom and prescience, and skill in the mechanical arts, especially in the fabrication of arms. They are farther described, as capricious, vindictive, and easily irritated.
If we replace fabrication of arms (the high technology of its day) with expertise in technology then all of these attributes are ones also ascribed to aliens.
Fairies were considered to live underground or underwater, both of which are features of "UFO base" stories.
Fairies can interbreed with humans which fits with the alien/human hybrid hypothesis.
Fairies come at night and carry people off. As Scott explains:
Gervase of Tilbury, in the Olia Imperialia, mentions certain hags, or Lamice, who entered into houses in the night-time, to oppress the inhabitants while asleep, injure their persons and property, and carry off their children.
Fairies are also associated with circles in the ground. Reminiscent to the modern mind of crop circles, but more likely "fairy rings":
The Fairies of Scotland are represented as a diminutive race of beings, of a mixed, or rather dubious nature, capricious in their dispositions, and mischievous in their resentment. They inhabit the interior of green hills, chiefly those of a conical form, in Gaelic termed Sighan, on which they lead their dances by moonlight ; impressing upon the surface the marks of circles, which sometimes appear yellow and blasted, sometimes of a deep green hue ; and within which it is dangerous to sleep, or to be found after sunset. The removal of those large portions of turf, which thunderbolts sometimes scoop out of the ground with singular regularity, is also ascribed to their agency. (Scott p308)
People who encounter fairies are often taken on journeys to far of places (like the fairy boy of Leith). Scott quotes the story of a Laird Duffus from a 1695 publication:
A tradition existed, during the seventeenth century, concerning an ancestor of the noble family of Duffus, who, " walking abroad in the fields, near to his own house, was suddenly carried away, and found the next day at Paris in the French king's cellar, with a silver cup in his hand. Being brought into the king's presence, and questioned by him who he was, and how he came thither, he told his name, his country, and the place of his residence ; and that, on such a day of the month, which proved to be the day immediately preceding, being in the fields, he heard the noise of a whirlwind, and of voices, crying, ' Horse and Hattock !' (this is the word which the Fairies are said to use when they remove from any place,) whereupon he cried ' Horse and Hattock' also, and was immediately caught up and transported through the air, by the Fairies, to that place, where, after he had drunk heartily, he fell asleep, and before he woke, the rest of the company were gone, and had left him in the posture wherein he was found. It is said the King gave him the cup which was found in his hand, and dismissed him." The narrator affirms, " that the cup was still preserved, and known by the name of the Fairy cup." He adds, that Mr Steward, tutor to the then Lord Duffus, had informed him, that, " when a boy at the school of Forres, he and his school-fellows were upon a time whipping their tops in the churchyard, before the door of the church, when, though the day was calm, they heard a noise of a wind, and at some distance saw the small dust begin to rise and turn round, which motion continued advancing till it came to the place where they were, whereupon they began to bless themselves ; but one of their number being, it seems, a little more bold and confident than his companions, said ' Horse and Hattock with my top,' and immediately they all saw the top lifted up from the ground, but could not see which way it was carried, by reason of a cloud of dust which was raised at the same time. They sought for the top all about the~place where it was taken up, but in vain ; and it was found afterwards in the churchyard, on the other side of the church."—This puerile legend is contained in a letter from a learned gentleman in Scotland, to Mr Aubrey, dated 15th March, 1695, published in Aubrey's Miscellanies, p. 158.
People coming across fairies tend to do so in the woods, on hills or near where they have some form of transportation (usually horses).
It does seem that whatever people are experiencing with UFO's and aliens is very similar or identical to the experiences of people with fairies in earlier times. I present this as my theory. You may wish to comment if you agree or disagree. I am sure I will have more stories to add as time goes on.