Of elves, dwarves, and demons

We tend to scoff at historical reports of elves and changelings, of dwarves and demons.  But prior to knowing enough genetic science to understand the various ways that DNA can go awry, what would have been a more logical explanation for observable phenomena such as this?

Charlotte was born with a form of Primordial Dwarfism so rare doctors don’t even have a name for it. But despite being warned she could die before the age of one, Charlotte has developed into a boisterous and inquisitive girl.

Look at the pictures.  In those without her glasses, Charlotte looks more than a little like something out of a Harry Potter movie.  In fact, if she stays healthy and survives to adulthood, she might well hope to have a very profitable career as an actress as she does not appear to have any of the bulbous features that commonly appear on midgets.

Of course, this may be a dangerous line of thought, as if there were material evidence of elves and changelings, one wonders what physical phenomena inspired historical tales of giants and demons.