By Nasjonalbiblioteket from Norway - Glædelig Jul, 1885Uploaded by Anne-Sophie Ofrim, CC BY 2.0,
Many people wonder what is this little Christmas being, that appears in so many Scandinavian stories, songs and mainly in floklore. It comes from really old beliefs and with the simpliest words is the mythological creature (tomte, tomtenisse – Sweden, nisse – Norway, Denmark, tonttu – Finland). Nisse is the word derived from the name Nils, which is form of Nicholas. On the other hand, tomte is derived from word tomt, which means homestead or building lot. It’s associated with the winter solstice and, of course, the Christmas season. Their appearance is pretty similar to that of a garden gnome (hagenisse in Norway).
According to tradition, the nisse lives in the houses and barns of the farmstead, and secretly act as their guardian. If treated well, they protect the family and animals from evil and misfortune, and may also aid the chores and farm work. However, they are known to be short tempered, especially when offended. Once insulted, they will usually play tricks, steal items and even maim or kill livestock.
By Gudmund Stenersen - Own work, Hom san, CC BY-SA 3.0 - Nisse stealing hay
Despite his small size, the nisse possessed an immense strength. He was easily offended by careless lack of proper respect and lazy farmers. As the protector of the farm and caretaker of livestock, and his retributions for bad practices ranged from small pranks like a hard strike to the ear to more severe punishment like killing off the livestock or ruining of the farm’s fortune. Observance of traditions was thought important to the nisse as he did not like changes in the way things were done at the farm. He was also easily offended by rudeness: farm workers swearing, urinating in the barns, or not treating the creatures well would do so under the threat of a sound thrashing by the tomte/nisse. If anyone spilled something on the floor in the house, it was considered proper to shout a warning to the tomte below.
They demand only the respect and trust of the farmer and a bowl of julegrøt (Christmas porridge) with butter on Christmas Eve. A nisse considers porridge his due and is greedy for butter. The legend When the Nisse Got No Butter on His Christmas Porridge illustrates the consequences of tampering with his porridge.
Legends of the domestic nisse and tomte meet the modern day version of the julenisse or jultomte in the tradition of leaving a bowl of julegrøt with butter out in the barn or in the house for them on Christmas Eve. This tradition is still practiced in Scandinavian homes.
That’s all I gathered from multiple sources. I hope it shows a little more light on those mystical creatures.