LIGHT ELVES

Light Elves are the inhabitants of Ljossalfheim. They are virtuous, nature-loving and fair creatures. They are governed by one of the Vanir family - Frey.

DARK ELVES

Dark Elves, or Dwarves, live in Svartalfheim. When Ymir was killed, the Gods turned the maggots inside his body into conscious creatures that soon developed a form of dwarves. They are the most productive creatures of all. They are craftsmen of old, creators of many important artifacts, among which the most praised one is Thor's hammer Mjollnir.
This is how Mjollnir was created: sons of a dwarf Ivaldi made Sif's golden hair which grows like normal hair, after Loki had cut her own hair. They also made Gugnir, the spear that never stops in its thrust, and Skidbladnir, the best ship of all, the ship that has a favoring wind as soon as the sail is raised, but could be kept in a pouch. When Loki saw these objects, he wagered his head with the dwarf Brokkr that his brother Sindri wouldn't be able to make three things equal to these in virtue. And, although each of the three things that Sindri had made was slightly damaged, because Loki bit him in a form of a fly each time he was crafting one, they all won the competition. Odin chose the ring Draupnir over the spear Gugnir, because every ninth night, eight new rings of exactly same size would drop from it. Frey voted for boar that runs better than any horse and glows from its golden mane and bristle even from the darkest place, while Loki offered him the ship Skidbladnir. Thor decided that the golden hair was of less value then the hammer Mjollnir that never misses and returns to his hand. After this judgment, Loki tricked Brokk saying hat he didn't want to give him any of his neck, only his head, so Brokk stitched Loki's lips with thong instead of cutting off his head.
Four dwarves - Alfrigg, Dvalin, Berling and Geer, were the creators of Freya's wonderful golden necklace Brisingamen. Their price was a night with each.
We should also mention four 'cosmic' dwarves. When the Gods created heaven out of the skull of Ymir, they placed four dwarves to hold it: Nordri (North), Surdri (South), Austri (East) and Vestri (West).