In my setting diminutive races like fairies, gnomes, and gremlins exist and to handle of the cooler climates such as in Europe and protect themselves for their many predators many of them live underground. While issues like ventilation seem difficult are certainly possible given that ants and termites and food could be solved with them farming underground plants, fungi and insects.

The main issue I haven't figured out is what they'd use for lighting prior to the invention of electrical lights given that fire would proportionally need more fuel for their size and the smoke would likely prove hazardous.

Feyfolk range from 6.5 to 10 inches (16 to 25 cm) tall and while having better vision than humans still can't see in the dark well.

Given this what could feyfolk use for lighting?

Note: magic doesn't exist in my setting