Well. Not a straightforward “check the dictionary, duh” kind of question, it turns out. Merriam-Webster and others simply list “faery” and “faerie” as “less common” or even “obsolete” variants of “fairy.”
The word comes from Old French “faerie” and “fae,” leading to Middle English “fairie” (oh look, another variant) which became Modern English “fairy.” So yes, in a sense, the modern version is spelled “fairy,” as the dictionary says. However. Connotations must be taken into account.
First problem I have with “fairy”: it makes people think of the Disney style of fairy. Glittery pink wings, giggling, sanitized, harmless, a cute party costume for five-year-olds. This isn’t the kind of fairy I’m writing about.
Second problem I have: “fairy” has become derogatory slang for a gay man, which is both distracting and a mean-spirited kind of attitude I want no part of.
As someone puts it on this language discussion forum, “fairy tales and the associated idea of fairies typically refer to the genre of folk stories printed by the Brothers Grimm, then sweetened and popularized for modern audiences by Disney et al. Faerie stories, on the other hand, are stories about the fae: otherworldly, unpredictable, and dangerous creatures who appear in the folk-tales and myths of England and Ireland. In origin, of course, the fairies and the fae are one and the same, but the connotations and usage of the words today are headed in opposite directions.”
I like the spelling “faerie,” even though it gets marked “archaic or poetic” by the dictionaries, and sometimes even “pseudoarchaic”—ooh, no one wants to be called that! Feeling the lexicography burn, Edmund Spenser? (With The Faerie Queene, from 1590, Spenser apparently used a deliberately archaic spelling.) But “faerie” also has the complication that it sometimes refers to fairyland, the realm of Faerie, rather than an individual being.
So: “faery,” then?
Much of my visual idea of the kind of fae I’m writing about comes from the brilliant, gorgeous artwork of Brian Froud—whose most influential volume on the subject is of course titled Faeries. In his own writing about them, he spells it “faery” for singular, so really, if Brian Froud calls them that, it’s good enough for me.
Exhibit A: page from Froud’s Good Faeries, Bad Faeries:
That said, Froud seems to prefer “the faeries” as the plural, whereas I’ve fallen into the habit of “the fae,” just because I like it. Plenty of others use “the fae” too, just not Froud so much.
Thus I’m going with “faery,” but in case anyone ever asks, yes, I know it’s an imperfect solution, and I know some people will call me pseudoarchaic. I’m feeling the burn.