Oh, how to explain this. It's difficult for Cole to explain things normally but explaining the Fade is like explaining the oceans or the sky. It's just there. It's always been there.

"It runs next to the world. Spirits live there, but people can access it too, but not like us. Not like this." Not physically, standing in here, face to face talking as Yuya and Cole currently are. "The fae should be from the Fade."

Magic came from the Fade as well. If the fae were these powerful magical beings from different realms that Yuya was thinking of, then it only made sense that they came from the Fade. But they don't because Yuya doesn't know about the Fade so where exactly did they come from in the first place?