Years ago, all of humanity was shrunk down by the elves ever since the elven goddess Asyn told her people how much of a wonderful time she had with a human she shrunk. The elves misunderstood what their goddess said but by the time anyone realized that it was too late and all humans were turned into tiny exotic pets for the elves.
Nowadays, humans are just pets for their elven owners and while they are treated nicely they are no longer considered equal to the elves and human villages are now usually tiny enough to be kept in elven homes and with most if not all elves having the ability to shrink things, they could shrink their human pets and the human villages they owned at will to suit their whims. Even the the smaller magical creatures like bug girls took advantage of the now tiny humans which led to a drastic change in the ecosystem.
Other magical races weren't so keen on the idea of re-sizing all the humans and making them pets because they saw it as slavery and just downright cruel. Some even believed it that teaching the younger generation and convincing humans themselves about how treating humans like pets or playthings was somehow a good thing could be considered indoctrination or straight up gaslighting because it removed their freedom, their independence and their individuality. Elves even stated that humans were always meant to be this small.