(Which is not the same as The Problem with Elvis, just so you know.)
Most fantasy settings have elves. Or, if they don't, they have some other race that is very long-lived and intellectual. For me, such beings have always been a real stumbling block when developing a setting. How can the fallen Empire be a time of misty legends when you have people walking around who were there? Also, how weird is it when you meet up with your new companions at the tavern at first level, only to realize that the elf in the party knew your grandfather when he was a boy? And why is it that someone who spent five times as long on their apprenticeship as you knows pretty much exactly the same things?
I ran into this problem when first developing my Seven Kingdoms setting, many iterations ago. I wanted the past to be vague, largely undefined in the setting document, and largely unimportant to the current setting. Then I realized that if I had elves walking around pushing the millenium mark in age, they could just tell the human historians what happened.
Imagine how the Dark Ages of Europe would have been different if elves who had been raised under the Roman Empire were present at Charlemagne's coronation. Keep in mind that an elf born during the Black Plague could still be alive today! Scholars wouldn't need to hunt down rare primary texts on how feudalism changed with the advent of the Age of Exploration, they could just ask the elves.
How do you fix this, or at least keep it from warping our human-centric view of how history works? Well, you can't just say that the elves don't pay attention. They are sages and intellectual beings. Even if the average elf only cares about singing and prancing through the trees, someone is going to be writing treatises on the development of the human kingdoms. You also can't really say that the elves keep that information away from the humans. Your first elf PC will blow that out of the water, and it just doesn't make sense. Kings would pay dearly for the elven insight, and there would be elves anxious to educate the poor short-sighted humans.
Can you just incorporate it? Can you write the history in such a way that the lessons of the elves break, or at least delay, some of the classic historical cycles? Maybe, but I doubt it. It just requires too extensive a change in outlook.
You could put the elves at war with the humans. In fact, they've been at war with humans for longer than anyone else remembers, for reasons that no human today understands. The elves just keep coming out of the forest every couple of years and killing people. If the elves are at war, then clearly they won't be working to give the humans the benefit of their knowledge. But, that does put elf PCs in an awkward place.
You could make the elves rare enough that, while every king might have an elven historian in their court, they simply don't have the influence to make much headway against the prevailing nature of the humans. They can warn the human king that he is repeating history, with a low chance of preventing history from being repeated. This is probably the simplest and neatest solution, but it does restrict the kind of influence elves can have in your campaign world.
Tell My Grandchildren I Would Have Loved Them
Many other articles have been written about the unique role-playing challenges involved in portraying someone who lives several times as long as the average human. So, I'll keep this section short.
How do you handle the interaction between ordinary humans and beings who can watch entire dynasties rise and fall? I mean, a young, first-level elf is probably already over a hundred years old. Odds are good that they view their entire adventuring career with the party the way we might view a two-year stint in the army or with the Peace Corps. It's just taking a bit of time to explore the world before settling down to raise a family. During which time the young, first-level human ages into a grizzled veteran who regrets never settling down to raise a family.
The simplest solution, of course, is just to ignore it. Elves just act like humans with pointy ears most of the time. Simple, but not terribly satisfying. A more complex solution is to really play up their alien nature. That often requires a pretty top-notch role-player, though. It also often requires a fairly indulgent group, as playing with an alien who considers a year-long strategy to be "thinking in the short term" can be really annoying.
You Have the Strangest Learning Curve
So, an elf takes a hundred years to reach maturity. During which time they learn as much as a human does in twenty. They then go adventuring with the humans, where they level at roughly the same rate. So, they learn more in the five to ten years of adventuring than in the previous hundred years. And, yet, they don't seem capable of maintaining that pace, as you don't see many 500-year-old level 100 elves.
Basic D&D fixed that issue by making elves level at roughly half the rate of everyone else. Well, it wasn't a total fix, but it at least addressed the issue. Of course, then they level-capped the elves, which made no sense at all.
I recently ran into this again when noodling with another setting, in which PCs could play dragons who were effectively immortal. But, seriously, how can you have a first-level immortal being? I mean, part of the enjoyment of playing an immortal being, as anyone who plays Vampire can tell you, is being able to name-drop from centuries ago. That would have to imply, though, that the immortal has centuries worth of knowledge. Even if a big chunk of that is forgotten, and another big chunk is just obsolete now, that still leaves a few big chunks that really ought to impact play. How can you make that fair to both the immortal PC and the other PCs?
Can You Solve For Elf?
There is one rather odd solution, that involves redefining some of how elves work. Define that their biology really does reinforce this sort of learning curve. It takes them a hundred years to learn what humans do in twenty. Then, shortly after they reach maturity, elves enter a period during which they can learn skills at a radically accelerated rate, roughly equivalent to humans. This period only lasts about twenty years. After that, their learning slows to something like a 10 to 1 ratio. Every couple of centuries, they experience another burst of learning potential.
During these periods of intense learning, most elves leave the stagnant security of their villages for the faster-paced human world. Most humans will only ever encounter an elf who is on one of these walkabout-type journeys. They attempt to compress as much training and practical experience in as they can (and nothing gives you compressed practical experience like adventuring!). Once that time passes, they retreat from the human world again.
This not only explains why elves risk their ridiculously long lives on frivolous adventuring, and why they can level at the same rate as humans, but also helps with that previous issue about elves affecting history. Elves really are nearly ignorant of human history between their walkabouts. And even when they are on walkabout, they are much more interested in learning than in teaching. If a human wants to hear about a prior time in history, he has to travel to one of the hidden elven villages and convince one of the elves that was on walkabout then to talk about it. Which is roughly as much work and as reliable as finding a book written by a contemporary human.