I know I'm barely here but I've been giving this some thought, and here's my jumbled cents.
The long and the short is: with their caps to powers/appearance and their relative immunity (cannot be ruled, Greatwood protects them, etc) there's just... no reason to make a Fae, unless you really want a Fae. What I think they need is to be bumped up to the same level as the others to make them a viable/attractive choice, and some danger. I have some ideas that could also engage the Halo and/or Torchline and HG people and ultimately lead to more cross-species interaction, but most of them would fall flat unless people were willing to pick up an extra character (obviously a Fae, lmfao) and I'm not sure how many people in the community have that free capacity right now.
- The leveling cap: I get why it's there, but I think most people tend to look at their future characters and their long-term goals. Having the fae be comparatively crippled in terms of power (levels attainable, magic/shifts attainable, etc) is just like.. there's not really anything mechanic-wise to offset that right now. If they were absolutely thriving as an rp race people would make them for the amazing plot opportunities and rich rp, y'know?
- Their appearance/age: A lot of people have a clear idea of what they want in a character, and most of it is applicable to any race - except the Fae (and maybe mermaids idk yet but they seem adoptable only for now). They have a clearly defined appearance structure (skin, eyes, build, height), which, again, makes sense: they're an isolated species. But it's quite limiting for a player. Same with age, kind of, in general I've experienced that people tend to want to play a character that starts younger (18-30), and this doesn't translate easily to Fae. Slower to mature, sure, but older = more memories = more daunting to tackle. Same with them being all Naturals, you can't bring in/adapt a previously existing character (something a lot of people enjoy doing), and we still have a clear majority of Outlander characters.
- The way that they were introduced: this is problematic because the Greatwood was revealed at a time when the player base was fairly stable and "capped" in terms of how many characters you could handle. This is reflected in the fact that the Hollowed Grounds still has a majority of the citizenship as well. Most people weren't in a position to start playing a Fae, and were more interested in exploring the Greatwood with their already established character.
- Leadership/lore: There's a lack of possibility due to the fact that the Greatwood (which IC makes sense, yes) cannot be ruled. Delah would be daunting to adopt, even if it's possible, but unless you find a player who's really into the Fae and driven I think you'll be hard pressed to find someone to take over as the Fae leader. The relative lack of lore is a double-edged sword, because if you find someone to take over and start to try and bring them up to activity and shape the culture then yeah, they get a sort of clean slate with general guidelines, but without a cohesive Fae community I think people are just sort of afraid of misrepresenting the idea behind the Fae.
- Lack of conflict/direction: Others touched upon this too. The Fae are just sort of existing there, seemingly thriving, and there's no drive or purpose to them (partially due to the fact that there's not really anyone playing them).
The long and the short is: with their caps to powers/appearance and their relative immunity (cannot be ruled, Greatwood protects them, etc) there's just... no reason to make a Fae, unless you really want a Fae. What I think they need is to be bumped up to the same level as the others to make them a viable/attractive choice, and some danger. I have some ideas that could also engage the Halo and/or Torchline and HG people and ultimately lead to more cross-species interaction, but most of them would fall flat unless people were willing to pick up an extra character (obviously a Fae, lmfao) and I'm not sure how many people in the community have that free capacity right now.
