Continuing with the fairy tale theme, let's take a look a sprites.
I think that sprites are seldom used because they often viewed as more of a nuisance than an encounter. While it's true they are pretty harmless in combat, I think that they could make for a very interesting roleplaying encounter and/or noncombat challenge.
What's strange to me is that these little ones can appear as wandering monsters in a dungeon environment (level 1). Perhaps it's not too far underground for them? They mostly appear near rivers, in woods, and in non-urban inhabited areas.
While I feel these are largely unimportant in this case, let's have the stats, shall we?
Sprite (from Moldvay) -
HD: 1/2 (1d4 hp)
Move: 60' (20') Flying: 180' (60')
Att: 1 spell
Damage: see below
No. App: 3-18 (5-40)
Pretty unimpressive, I mean, they are fast on the wing, and their AC is probably due to speed and their diminutive size (1' tall), but no attack and no damage means they aren't going to be a good choice for that TPK you've been brewing up.*
No, where the sprites are most interesting is in their curse ability and their attitude. They are described as 1' tall winged people "related to pixies and elves." They are shy but curious, and have "a strange sense of humor."
Sprites are prankster gangsters.
I don't know why, but I really like the idea that a "monster" in the game is motivated simply by the desire to have a laugh. No eating people, no stealing gold, just comedy.
If five sprites work together -sprinkling fairy dust or whatever- they can enact a curse on their victim. Rather than a curse like the spell, it takes the form of a practical joke. Given the examples (tripping, nose growing) and that the book mentions using remove curse to get rid of it, it seems that the curse can have a duration or not. It's described as casting a curse spell, so there's a saving throw, but assuming they cast it 1/day per 5 sprites, a group 10-15 can hit 2-3 PCs.
The other thing to keep in mind is that curse has a range of 0', that means at least one of the sprites needs to touch the PC. Once that's done, they could fly away laughing at 180' and leave the victim behind with his donkey ears or whatever, having to walk back into town and explain things to the local cleric.
Alternately, the sprites may offer to lift the curse (another group could cast the reverse) if the PCs perform some task like getting them some honey from that big bee hive or maybe there is some predator that is harassing them the party can deal with. Not to mention, like the nixies, it might be possible to get information from the sprites if they're approached correctly. Side quests and RP opps galore!
*Don't ever do that.