Not much is known of the history of the elves, but they apparently have a deep connection with the World Tree, revering the tree as their God. This is at least the case with the elves of the Tower of Akenash.
As stated above, the elves of Akenash worshipped the World Tree as their deity. However, this is not the case of the Dark Elves of Korringar. The mostly subterranean elves worshipped a large insect known as Lakima, the Queen of the Roabies.
The magical properties of the elves appeared to vary based on their origin. The elves of Akenash possessed the abilities to conjure elven spirit known as the Doomed, and possess a limited form of omniscience, being able to detect creatures within a certain radius of them. In addition, the elves can communicate telepathically and read the minds of those who have consumed Amber.