Svartálfar (“black elves”) were formed from the maggots feasting on Ymir’s flesh. They live under the hills and mountains or the better known Svartalfheim, one of the mythical regions of Yggdrasil. Of course Svartalfheim, could be the same place as the underground realm Niðavellir/Nidavellir, the land of the dwarves in other texts.

They may be either benevolent or malevolent. The original Svartalfar worked the forges on the lowest level of the world tree. Their roles and countenance vary throughout Germanic folklore but are sometimes mentioned with Black or Dark skin as a result of working at the forge.

Aside from the given name of Svartalfar, is the name Dökkálfar ("Dark-elves"). These are male ancestral spirits who may protect the people, although some can be menacing, especially when one is rude to them. But stories concerning harm are more common. They are generally light-avoiding, though not necessarily subterranean.

Sources:
• http://en.wikipedia.org/wiki/Svart%C3%A1lfheim
• http://en.wikipedia.org/wiki/Svart%C3%A1lfar
• "Svartalfar." Encyclopedia Mythica. 2007. Encyclopedia Mythica Online. 18 Nov. 2007 .
• "Ymir." Encyclopedia Mythica. 2007. Encyclopedia Mythica Online. 18 Nov. 2007 .
• http://en.wikipedia.org/wiki/Dark_elves