I've never seen one wearing a hood (5)
I believe the answer is:
pixie
'hood' is the definition.
(thesaurus)
I don't understand how the remainder of the clue works.
Can you help me to learn more?
(Other definitions for pixie that I've seen before include "Supernatural being with pointed ears" , "Sprite" , "Little person" , "Elf, imp" , "Small supernatural being in fairy tales" .)