This is something that I had never heard of before but after Brian's cousin in the Ozarks started it for her children, Brian's mom bought one so that we could start the tradition here.
Nicholas (this is what we named our elf) comes around Thanksgiving time and stays until Christmas Eve where he goes to the North Pole until next year. You place the elf on a shelf, mantel, in the tree, where ever you think of so that he can watch over your children. Every night the elf goes to the North Pole and reports the days findings to Santa Claus. Then when the children wake up the next morning the elf has taken residence in another spot to keep an eye on them for the day. There is a book that goes along with it so that the kids know exactly what to do.
There is only one rule: children can not touch the elf. This will make him lose all of his magic. Now I must say that when we got this and James knew he couldn't touch it, it devastated him. He cried so hard because he didn't think that he could resist and he didn't want to be the reason for the magic being gone. We assured him that all would be well and the elf just has to make sure that he is in good hiding places that are well out of reach.
I have to admit that this is neat for the little ones. James might be getting a bit old and next year we might not be able to pull it off but it will be a lot of fun when Parker and heaven forbid grandkids come around!