The Sidhe (pronounced shee), are the god-like beings of Celtic society. Sometimes conflated with the Tuatha de Danaan, this site (http://www.shee-eire.com/magic&mythology/fairylore/Sidhe/page%201.htm) posits that they were a real people that were descended from the Tuatha de Danann. “The people known as “The Sidhe” or people of the mounds, or “The Lordly Ones” or “The Good People” were descended from the “Tuatha de Danann” who settled in Ireland millennia ago .”
“Clearly the belief in the sidhe is part of the pre-Christian religion which survived for thousands of years and which has never been completely wiped out from the minds of the people. . . .The sons of Mil fought them in battle and defeated them, driving them ‘underground’ where it is said they remain to this day in the hollow hills or sidhe mounds . . .
The sidhe of the subterranean mounds are also seen by the Irish as the descendants of the old agricultural gods of the Earth . . . These gods controlled the ripening of the crops and the milk yields of the cattle, therefore offerings had to be given to them regularly. In the Book of Leinster we discover that after their conquest the Tuatha De Danaan took revenge on the sons of Mil by destroying their wheat and the goodness of the milk (the sidhe are notorious for this even today). The sons of Mil were thus forced to make a treaty with them, and ever since that time the people of Ireland have honoured this treaty by leaving offerings of milk and butter to the Good People.” http://celticsociety.freeservers.com/sidhe.html
“A notable feature of the Sidhe is that they have distinct tribes, ruled over by fairy kings and queens in each territory. It would seem that the social order of the Sidhe corresponds to the old aristocracy of ancient Irish families, which is in itself a reflection of the ancient Celtic system of rank. It is interesting to note that many of the Irish refer to the Sidhe as simply “the gentry”, on account of their tall, noble appearance and silvery sweet speech. In their faerie realms they have their own palaces where they feast and play music, but also have regular battles with neighboring tribes . . .” http://mysticwicks.com/archive/index.php/t-50631.html
In Wales, the mythology derives from this Celtic understanding of the gods, but was shaped over time by a particularly Welsh take on it. The Welsh Otherworld was also ruled by two separate ‘tribes': the children of Llyr and the children of Don. They are not in rivalry with one another, though conflict is described in the Mabinogi (a book of Welsh mythology), but more part of an extended family. A geneology is here: http://www.timelessmyths.com/celtic/welshhouses.html
Finally, the Welsh sidhe are also known as the Tylwyth Teg, though these are also more akin to faeries: “The sidhe also exists in Welsh tradition. It is refered to as a gorsedd, meaning “seat”, tor meaning “hill” or “tower”, and “Caer Siddi” in the poems of Taliesin. For instance, there is the Gorsedd Arbeth, where Pwyll pen Annwfn first sees Rhiannon, and where later Pryderi causes an enchantment to fall on Dyfed. Then there is Glastonbury Tor, where according to one saints’ life–that of Saint Collen–Gwynn ap Nudd rules over the Tylwyth Teg. Giraldus Cambriensis records the story of Elidur, a priest who lived with the “Good People” as a child, after finding their home in the side of a hill. Interestingly, Girladus claims that they spoke Greek, which would back up certain claims of descendence from the Greeks and Trojans, a common theme in some of the early histories and bruts . . .” http://www.maryjones.us/jce/otherworld.html
For more information about Welsh faeries, see: http://www.sarahwoodbury.com/?p=1735