They leave the nice children gifts and the naughty children ROTTING POTATOES.
Officially called Yule Lads, these terrifying creatures visit the children of Iceland on the 13 days before Christmas. Children leave their shoes on the window sill and, if the child was well-behaved, the Yule Lads would stuff them with gifts. But If they were naughty, they stuff them with rotting potatoes. This is real Icelandic lore and you can learn more about it here.
Stekkjarstaur (Sheep Cote Clod)
Sheep Cote Clod gets his name because of his affinity for harassing sheep. He's easily identified by his stiff peg legs.
Fear Level: Standing over a subway grate.
Giljagaur (Gully Gawk)
Gully Gawk is famous for hiding in gullies and waiting for his chance to sneak into the cowshed to steal milk.
Fear Level: Running into an ex.
Stúfur (Stubby)
He's called Stubby because he's really short. But what he's really known for is stealing pans to eat the crust out of them.
Fear Level: Watching Pee-Wee Herman's Big Adventure.