Mist Elves are a truly ancient race, literally born from the mists of time. They are almost immortal and some of their ancient members are believed to have been present at the dawn of creation. Their incredible lifespan gives them a very different and aloof look on life and civilization as they regard even Gray Elves as mere toddlers. Combined with the fact that Mist Elves are a very magical races, their bodies being made from magically solidified mist, they appear frightening, uncaring, cold and wise at the same time. They scoff at the views of the younger races and life doesn't mean much to them, having seen many empires rise and crumble within the span of a single Mist Elves life.
Mist Elves are even larger than Gray Elves but thin and frail beings. Their skin is almost white, their hair is pearl white and it seems to move with a slight breeze all the time. Ther breath is misty and their yes are pearly, violet, pink oder yellow. Mist Elves move almost without sound. They physique is weak and they are not very strong. Additionally they are the most fairy like of elves, going so far that the prolonged touch of mundane metal burns their skin like acid. Thus their prefer to wear and wield weapons and armaments of precious metals, like mithril or adamantium.
Grey Elves despise Mist Elves, viewing them as uncaring beings devoid of emotion and lacking the general elven love for life. Mist Elves just chuckle about the antics of their baby cousins. Mist Elves, having been lifted from the mists of time themselves during creation, have a very specific grasp of necromancy. Most of them - if not drawn towards Chaos due to boredom - hate undead and are very powerful in combatting them by using their magical powers to wreak great harm upon undead. Mist Elf necromancers are able to create special creatures and engage in an act of creation rather than in infusing dead beings with unholy energies, called white necromancy by themselves.
Mist Elves are the rarest of all elves, you will encounter a thousand Gray Elves before you see one Mist Elf. They are rumored to live in misty areas high in mountain valleys or deep in the hills but no mortal known has ever seen one of their settlements. Some sages believe them to be physical manifestations of the dreams of gods, others regard them as leftovers from the act of creation itself. Mist Elves just chuckle and move on at such useless ponderings.Game-wise I imagine mist elves with even less toughness and strength than Gray Elves and also with even less hit points. But in exchange they receive a special bonus in melee combat, suffering but one-half damage from all melee attacks (which actually makes them pretty tough in melee but a lot more vulnerable to magical and missile attacks). Mana will be extremely high due their connection to creation, as well as willpower and perception. All mist elves will start with leather and mithril equipment as they suffer actual burns from normal metal (if exposed to it prolonged, e.g. wearing significant amounts like armor, boots, helmets, etc.). Preferred skills will be Literacy, Stealth, Concentration, Dodge, Alertness and Necromancy (although they don't use corpses unless chaotic).
They probably need special background histories and I'm still pondering whether to exclude certain classes from some races (e.g. barbarians do not seem to fit my vision of mist elves but I guess we'll have to see).