Literal:
* The fairy flitted through the garden, leaving a trail of shimmering dust.
* She believed in fairies and left out milk and cookies for them in the forest.
Figurative:
* The dress was fairy-like, with its delicate lace and flowing fabric.
* He had a fairy-tale romance with a woman he met on a trip to Paris.
* The story was filled with fairy-tale creatures and magical adventures.
Idioms:
* The wedding was a fairy-tale affair, with beautiful decorations and a happy couple.
* Don't live in a fairy-tale world; face reality.
You can also use "fairy" as part of compound words like:
* Fairyland
* Fairytale
* Fairy dust
Remember that the context of your sentence will determine the best way to use the word "fairy."