Fairies are not so much weak to steel as they are to iron. This is due to old folklore that faefolk would enter the homes of children and replace them with changlings, but it was believed that iron bed posts would repel them. As such, ancient Europeans would decorate their homes and pockets with trinkets made of iron to keep fairies and other supernatural forces away. You can see it in modern culture today, they way some people are superstitious about hanging a horseshoe for good luck — they also serve to ward off evil spirits. Why Ice is weak to Sreel I imagine has more to do with industrialization than magic.
Luckily, the common Fairy is nothing but mischievous and seldom harmful, unless against a Dragon, that is! Impidimp is a good example of such. But we're better known for unity, purification, and being symbolic of nature.
You may have brute strength on your side with your Dragons, but don't forget our superior defensive stats, mighty resistances, and impressive HP! With Magic Guard, Healer, Natural Cure, and Synchronize, your Toxic moves becomes pointless. And Steel can easily be outplayed with our access to a deep move pool. ψ(`∇´)ψ