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Alfheim (pronounced "ALF-hame") is one of the Nine Worlds, more specifically the one inhabited by the light elves. According to Hearthstone, it isn't that different from Midgard, only brighter, and with no nights.
The inhabitants of this realm are known as Elves and used to practice magic known as alf-seidr (which the children of Frey and Frey himself can perform) however now they have no knowledge of the other realms and sit in front of computers watching "funny pixie videos" all day long.
The bright light around Alfheim is said to be different from that from Folkvanger. This is because elves need constant sunlight or else they'll fade away and die.
Alfheim is described to be like many of the upscale neighborhoods of Boston. Being the world of light and air, Alfheim is constantly bathed in sunlight and with the ground having a spongy texture.
Magnus and Hearth journey to Alfheim to find the Snoknung Stone in order to save Blitz.
Magnus, Blitz, and Hearth journey to Alfheim to find Bolverk's whetstone.