In Scandinavian folklore, a "household spirit" responsible for the care and prosperity of a farm. A nisse was usually described as a short man (under four feet tall) wearing a red cap with a tassel. While belief in guardian spirits is a very old tradition in Scandinavia, belief in nisser was prominent in the late eighteenth and nineteenth centuries in Denmark, southern Norway and southern Sweden. Many farms claimed to have their own nisse. The nisse took an active interest in the farm by performing chores such as grooming horses, carrying bales of hay, and other farm-related tasks. These chores were usually done much more efficiently and effectively than by their human counterparts. However, nisser were very temperamental, to say the least. If the household was not careful to keep its nisse satisfied (usually in the form of a single bowl of porridge with butter in it left out on Christmas eve) the spirit could turn against its masters. In one story, a girl is instructed by her family to give the nisse his porridge, but decides to eat it herself. The nisse responds by forcing her to dance until she nearly dies. Sometimes the offering themselves could backfire: in another tale, a grateful farmer gives his nisse a pair of nice white boots, and afterward the nisse refuses to go out into the rain to stable the horses for fear of getting his new boots dirty.

1) "A tomte ['tÉ”`m:tÉ›] or nisse ['nìs:É›] is a mythical creature of Scandinavian folklore originating from Norse paganism. Tomte or Nisse were believed to take care of a farmer's home and children and protect them from misfortune, in particular at night, when the housefolk were asleep. Tomte is the common Swedish name, derived from his place of residence and area of influence: the house lot or tomt. The Finnish name is "tonttu". Nisse is the common name in Norwegian, Danish and the Scanian dialect in southernmost Sweden; it is a nickname for Nils, and its usage in folklore comes from expressions such as Nisse god dräng ("Nisse good lad," cf. Robin Goodfellow)." "In the 1840s the farm's "nisse" became the bearer of Christmas presents in Denmark, and was then called julenisse (Yule Nisse). In 1881, the Swedish magazine Ny Illustrerad Tidning published Viktor Rydberg's poem Tomten, where the tomte is alone awake in the cold Christmas night, pondering the mysteries of life and death. This poem featured the first painting by Jenny Nyström of this traditional Swedish mythical character which she turned into the white-bearded, red-capped friendly figure associated with Christmas ever since. Shortly afterwards, and obviously influenced by the emerging Father Christmas traditions as well as the new Danish tradition, a variant of the tomte/nisse, called the jultomte in Sweden and julenisse in Norway, started bringing the Christmas presents in Sweden and Norway, instead of the traditional julbock (Yule Goat). Gradually, commercialism has made him look more and more like the American Santa Claus, but the Swedish jultomte, the Norwegian julenisse, the Danish nisse and the Finnish joulupukki (in Finland he is still called the "Yule Goat", although his animal features have disappeared) still has features and traditions that are rooted in the local culture. He doesn't live on the North Pole, but perhaps in a forest nearby, or in Denmark he lives on Greenland, and in Finland he lives in Lapland; he doesn’t come down the chimney at night, but through the front door, delivering the presents directly to the children, just like the Yule Goat did; he is not overweight; and even if he nowadays sometimes rides in a sleigh drawn by reindeer, instead of just walking around with his sack, his reindeer don’t fly - and in Sweden and Norway some still put out a bowl of porridge for him on Christmas Eve." Source and further information: http://en.wikipedia.org/wiki/Tomte