Machine elf

Machine elves (also known as fractal elves, self-transforming machine elves) is a term coined by the late ethnobotanist, writer and philosopher Terence McKenna to describe the apparent entities (described as "elves") that have been reported by users of dimethyltryptamine. References to such encounters can be found in many cultures ranging from shamanic traditions of native Americans to indigenous Australians and African tribes, as well as among western users of these substances.
Description by McKenna
McKenna's first published mention of the machine elves in his and his brother Dennis' book The Invisible Landscape (published 1975):

We especially refer to the apparently autonomous and intelligent, chaotically mercurial and mischievous machine elves encountered in the trance state, strange teachers whose marvelous singing makes intricate toys out of the air and out of their own continually transforming body geometries.
Later, McKenna describes the experience in more detail. The following is a partial transcription of a workshop titled "Time and Mind" - The Tykes. At about minute one or two of a DMT trip, according to McKenna, one may burst through a chrysanthemum-like mandala, and find:

There's a whole bunch of entities waiting on the other side, saying "How wonderful that you're here! You come so rarely! We're so delighted to see you!"

They're like jewelled self-dribbling basketballs and there are many of them and they come pounding toward you and they will stop in front of you and vibrate, but then they do a very disconcerting thing, which is they jump into your body and then they jump back out again and the whole thing is going on in a high-speed mode where you're being presented with thousands of details per second and you can't get a hold on and these things are saying "Don't give in to astonishment", which is exactly what you want to do. You want to go nuts with how crazy this is, and they say "Don't do that. Pay attention to what we're doing".

What they're doing is making objects with their voices, singing structures into existence. They offer things to you, saying "Look at this! Look at this!" and as your attention goes towards these objects you realise that what you're being shown is impossible. It's not simply intricate, beautiful and hard to manufacture, it's impossible to make these things. The nearest analogy would be the Fabergé eggs, but these things are like the toys that are scattered around the nursery inside a U.F.O., celestial toys, and the toys themselves appear to be somehow alive and can sing other objects into existence, so what's happening is this proliferation of elf gifts, which are moving around singing, and they are saying "Do what we are doing" and they are very insistent, and they say "Do it! Do it! Do it!" and you feel like a bubble inside your body beginning to move up toward your mouth, and when it comes out it isn't sound, it's vision. You discover that you can pump "stuff" out of your mouth by singing, and they're urging you to do this. They say "That's it! That's it! Keep doing it!".

We're now at minute 4.5 and you speak in a kind of glossolalia. There is a spontaneous outpouring of syntax unaccompanied by what is normally called "meaning". After a minute or so of this the whole thing begins to collapse in on itself and they begin to physically move away from you. Usually their final shot is that they wave goodbye and say "Deja vu! Deja vu!".

Other mentions of the DMT elves
McKenna was not the first to experience or report DMT elves, even if they probably owe most of their popularization to him. In an article published in The Journal of Mental Science (now the British Journal of Psychiatry) in 1958 under the title “Dimethyltryptamine Experiments with Psychotics”, researcher Stephen Szara (the chemist who first studied the human effects of DMT) talked about how one of his subjects under the influence of DMT had experienced “strange creatures, dwarves or something” at the beginning of the trip.
In a book entitled Psychedelic Monographs and Essays Volume 5, Peter Meyer, a philosopher, mathematician and developer of Terence McKenna's "Timewave Zero" software, spoke about the DMT elves. He reported a subject's experience of the elves after ingestion of DMT: "The elves were dancing in and out of the multidimensional visible language matrix". Meyer associates this experience with that talked about by Walter Evans-Wentz, who expressed that a world of entities such as fairies and elves exists "as a supernormal state of consciousness into which men and women may enter temporarily in dreams, trances, or in various ecstatic conditions". Meyer believes that the objective space that one may enter on DMT, and the faerie world described by Evans-Wentz, are one and the same.
Psychiatrist Rick Strassman, who made extensive research on DMT, encountered many DMT smokers who had experienced beings similar to McKenna's machine elves. Since, at the time, all of the subjects were from California, his first guess was that this was just a "West Coast eccentricity". In Strassmans words, "Also surprising were the common themes of what these beings were doing with so many of our volunteers: manipulating, communicating, showing, helping, questioning. It was definitely a two-way street". Parapsychologist David Luke has collated research regarding the encounter of machine elves and other supposedly discarnate entities on DMT.
Possible explanations
James Kent has put forth an explanation for machine elves. Kent postulates that the DMT landscape is simply disrupting or "editing" our processing of visual information and causing a chaotic interpretation of it inspired by hyperactive phosphene activity. The brain may fill in the blanks and since we all have an affinity for anthropomorphic things, a humanoid entity may appear out of all this chaos. Our "imaginal workplace" will take the center stage in brain activity, allowing internal data to be interpreted as external stimuli.

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