My oldest daughter loves fairies, and sometimes she likes to make fairy houses. You can buy fairy houses for the garden, but I think it’s more fun when kids make their own.
This can be very much a found items kind of project. My daughter usually selects a shoebox or other small box, and decorates that. Small rocks or bits of wood can make a path. She used to make traps for them too, until I convinced her that one should not attempt to trap magical creatures unless prepared to take the consequences of annoying that creature. Better to treat them well.