Several of the last few books I've read have featured little people of a sort. I know others have thought about this issue (hi, H), but I'm not thinking now about angry little dwarves but the other kind--helpful elves, brownies, fairies. In Terry Pratchett's Bromeliad series, the nomes are not precisely helpful to humans, but they're not unhelpful either. In fact at least some of them worship humans--specific ones, not humans in general--and the relationship between big and small is at the heart of the books. His Nac Mac Feegles can be either mischievous and helpful, depending on their mood, but they definitely are a boon to the earth in general, even if they steal from individual humans. In Blackbringer Magpie and her companions are trying to save the world for themselves, which will mean saving it for humans as well. In both, the little try to stay out of sight of the large; one of the profoundest taboos in the little world seems to be self-revelation to humans.
I think others have approached this question through the issue of audience: children want to identify with other small fry. And I think there's something to that, though since I'm increasingly thinking that most children's lit is read by adults, I'm not sure that's all there is. Perhaps we all want to identify with underdogs, whether we are children or adults, and small folk are so literally under that they qualify. (Though the fact that most of them--though not, it seems, the nomes--have magic may diminish their underdog status.)
Taylor's faeries remind me a bit of Philip Pullman's little people--the Gallivespians. They are fierce little warriors, short-lived (like Pratchett in the Bromeliad books, Pullman scales time down with size), and they use their size to their advantage. Pullman's Gallivespians are spies; Taylor's faeries know much more about the human world than humans can ever know about them. It's fun to think about the advantages of smallness; most often, I think, we focus on the disadvantages. (This is one of the weird--or fun, depending on your mood--things about reading Stuart Little, which is all about the difficulties of living in a human-scale world when you're a mouse.)
I do think scale is inherently fascinating: what changes, what stays the same, when size shifts? It's a question older than Alice and newer than Blackbringer.
(Next up: thieves and why we love them, too.)