Yes, fairies have human forms they can transform into -- or at least, a lot of them do. I think it's a fairly common ability, and I'm not sure if it's a spell they have to learn or something they do naturally (possibly a combination of both), but most fairies in Aylia's world seem to be able to do it. Even Lullela can do it, so that tells you it's not a very difficult spell! Of course, a fairy in human form can't do any magic at all (except for turning back into a fairy), so it makes sense Lullela wouldn't like it that much.
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