Hey! Sorry for the late response but thank you for your ideas, I'd love to here more of yours (cause I'm not too in love with mine) My basic idea is that the ruler/god-like figure of this realm occasionally sees fit to introduce new members to the society. So the lesser fairies have nothing to do with reproduction, people just kind of show up.
My basic background is this idea that about 4000 years ago magical creatures lived on the earth but as humans started to migrate out from the fertile crescent they took the new land they found for themselves. Some creatures hid, some fought, and some ran before humans even reached their shores. One such group of runners was the fairies who fled to a sort of pocket-realm. Time there passes much faster so even though it's only been a few thousand years for us it's been a bit more than a million for them. So they've evolved to fit the new environment. (which is a bit like a surreal endless forest except there is literally no other non-plant life forms). Culturally they've evolved to be pretty boring, because it's easy living in their new realm they've gone generations without war or famine or really any sort of hardship and they never had a NEED to advance they're society, which made them bored, apathetic, and passionless. (Okay I know this next part is really bad biology and I'd love a better idea) But my 'explanation' for how they evolved to be sexless is that the general lack of passion eventually also leads to a cultural lack of interest in romance and even love with leads to a biological lack of interest in sex which over those hundreds of thousands of years leads to a population without sexes. It would also be about this time that that vague god-like creature started introducing new members to the society.
….yeah, writing that just now I realized how much that's not a good explanation, yikes.
Idk if this will help but the basic premise of my actual story itself is that just like how we have 'fairy tales' actual fairies have these ancient legends about the mysterious creatures called human, and how they were strong and passionate and capable of great good and great evil, how they loved war and loved each other enough to kill and enough to die for, about how they were very brave and reckless and all that jazz. (actually I'll be honest a lot of this was inspired by those 'humans are space orcs' and 'earth is space Australia' type of posts) So anyway there's a small cult of fairies that are obsessed with humans stories and want to emulate human culture and the government views them as a threat to society, especially since this cult is forming an army and there is no military to stop them, so ironically enough they cut the veil between worlds and kidnap a human to destroy the uprising. The story is about this adventure-obsessed adult human who is a loser in the real world realizing he's like a god in this one. Because of that time moving faster thing from earlier he's there for a while just having a ball and making up all sorts of nonsense about how powerful humans are. Eventually he convince them that in order to defeat the uprising they'll need to abduct his best friend as well. So then along with his best friend, who is most soft-spoken depressed and a bit cynical, they set out to stop the cult and then a lot more stuff happens from there
but yeah, I still need to work on the fairy biology and culture. The fairies all look physically and act culturally extremely similarly and i know it's a bit cliche but one of the themes of the story is that adversity and diversity make life worth living so I want them to be as undiverse in body and mind as possible.