I often talk about my concerns with modern fiction and its portrayal of fairies, particularly the way they end up being humanized. While I understand why this happens and I can even appreciate it when reading it I see a lot of material from fiction that is clearly purely from an author's imagination making its way into modern pagan belief as if it were genuine folklore. Obviously that's a concern to me on multiple levels. Because of this I was recently asked for a list of books I would recommend for people looking for good fairy-themed fiction.
These are the main books that I suggest people look for if they want good folkloric depictions of fairies in modern stories. No books is going to be 100% perfect but these are as close as I can think of, and they are also good stories.
Lords and Ladies by Terry Pratchett - a book in Pratchett's Disc World series I chose Lords and Ladies specifically because his view of the elves here is pretty spot on for how inhuman and inhumane they can be. To quote the book: “… people didn't seem to be able to remember what it was like with the elves around. Life was certainly more interesting then, but usually because it was shorter. And it was more colorful, if you liked the color of blood.”
Faery Sworn by Ron C Neito - a very creative story but overall fairly true to the folklore. Some variance on what the Seelie and Unseelie courts are called, but does a great job of including things like aversion to iron, viciousness, time slip between Fairy and earth, and etiquette. My only critique would be at the idea that there are only single beings in some of the categories we know from folklore, ie 'the kelpie' 'the nucklevee', but that's a fairly minor quibble.
The Knowing by Kevin Manwaring - hard to find at the moment, an excellent blend of older fairylore and the modern world. Based on the story of rev. Robert Kirk but imagining his descendants into our time, very accurate to older fairylore.
Secret of the Kelpie by Lari Don - a children's book, beautifully illustrated, and extremely true to folklore. A nice and necessary balance to many modern urban fantasy and young adult books that try to paint kelpies and other unseelie fairies as the good guys.
Good Fairies of New York by Martin Millar - a unique look at urban fairies, although I usually try to avoid stories of small winged fae this one is worth the read. I particularly liked the multicultural aspects the author brought into the city fairies.
Jonathan Strange and Mr. Norrell by Susanna Clark - complicated story about magicians in 19th century England but has a great deal of fairylore in it as well as accurate depictions of the Good People
Spiritwalk by Charles de Lint - set in Canada, focused around a building, great mix of Celtic and North American fairylore.
These are also good books, however they do venture further from the folklore and need to be read with a grain of salt.
Modern Faery Tale series by Holly Black - gets points for portraying fairies along mostly traditional lines, and as ruthless and often cruel; loses points for tons of YA tropes and some major plot holes.
The SERRAted Edge series and Bedlam Bard series by Mercedes Lackey - Primarily written in the 90's the SERRAted Edge series* looks at the aos sidhe in modern America and includes a lot of folklore as well as some creative innovation, like the elves reacting to caffeine as if it were an addictive drug. The series is a bit dated at this point. The related Bedlam Bard series, which is set in the same universe and has some crossover, is also decent.
Toby Daye series by Seanan McGuire - modern fairies in America, reasonably close to folklore in many respects especially as regards politics in Fairy.
The Elfhome series by Wen Spencer - really interesting and creative look at an alternate reality where science has created an interdimensional gate that has accidentally shifted modern Pittsburgh into elfhome. Mixes tech with magic in fun ways, and uses Japanese folklore as a base, however it does take some creative liberties with that folklore that a Western audience may not fully recognize.
So there you have it. That covers my main recommendations and some secondary recommendations. Generally speaking I think most urban fantasy, while my favorite genre, tends to fall into the secondary recommendations (I'd even include my own in that by the way) because in order to create the story liberties with the folklore have to be taken, especially where there are romantic themes or subthemes which is almost the entire genre. It's often a safe bet to say if the fairies or a fairy in the book are main characters and even slightly relatable or sympathetic then liberties are being taken with the folklore (Faery Sworn is a notable and unusual exception).
*caveat I do not recommend the newest book in the series, Silence, which is co-written by Cody Martin. It ventures far from the rest of the series, and while the folklore isn't entirely inaccurate the book is not well written.