Dark elves were once banished from Daventry, when Graham became king and began to regain the land from its invaders.
However, they later returned to cause problems when the dark castle appeared above the kingdom. They were dangerous entities who could easily kill an unarmed man--or even an armed man lacking sufficient luck or skill. They were avoiding human settlments, seeming to prefer deserted byways and the lonely margins of the woods, but given time would have likely grown bolder. They were normally solitary creatures.
Dark elves are closely related to dwarves and gnomes, and the three races are often confused. Some theories even say they are the same race, but they do seem to be distinct in Daventry. While many elves appear to be small and similar to other Little Folk, some dark elves may be the evil equivalent to the sylvan elves, some being as tall as humans.
Behind the scenesEdit
In the King's Quest Companion dark elves are compared to other races of the Little Folk (including dwarves and gnomes)), suggesting that they are a short race ('short elves'). Which would make them as short as black elves and white elves likely (assuming black elves and dark elves aren't the same race). In the companion it may be possible that black and dark elves are intended to be the same race.
On the other hand, the references to dark elves in the Floating Castle mentions them along with trolls, and malevolent spirits (all three sharing the same basic descriptions of actions) which may suggest that they may be large creatures (possibly taller than humans like the rare tall sylvan elves).