fairy vs water sprite

fairy and water sprite both are nouns.

Word	Noun	Adjective	Verb	Adverb
fairy	Yes	No	No	No
water sprite	Yes	No	No	No

As nouns, water sprite is a hyponym of fairy; that is, water sprite is a word with a more specific, narrower meaning than fairy:

fairy (noun)	water sprite (noun)
a small being, human in form, playful and having magical powers	a fairy that inhabits water
offensive term for a homosexual man	aquatic fern of tropical America often used in aquariums