This story (originally published in 1988) starts like a record or verbal memo from a scientific expedition. The narrator is Meirax Andros (the etymology of which is something like "youth/girl" and "man" in Greek*). Wolfe uses feminine pronouns for the narrator, so not sure where he's going with that name. After the initial first person statement of 4 paragraphs, it shifts to a third person POV, but centered on Meirax.
The location coordinates are given as 50.8 by 53.4. If that's North by West, then they are just off of St. Pierre & Miquelon island on the east coast of Canada. If North by East, then it's central Russia, near Kazakhstan (in the Russian sense of near). Or it's some completely different planet, but it feels very Earth-like to me.
She is part of a two-person team with Michael. Michael is missing or dead, per the first paragraph, so this is retrospective. They have things like sleeping bags, a tent, and other technology, including things called "dragonettes"**, which turn out to be energy weapons.
Michael sneaks out at night. After a few nights, Meirax follows him, until he disappears into the "needle-trees".
There is definitely magic or unknown high technology involved. Meirax is injured in a fall after getting lost returning to camp after trying to follow Michael and wakes up in Lukora's home. Lukora is some kind of healer/witch/Galadriel with dark hair/young Baba Yaga. It's obvious Michael has met Lukora before, probably on his previous nocturnal travels. As soon as they leave Lukora's door, they are stuck in heavy brush. When Meirax looks back, Lukora's home is gone. This seems to explain how Michael disappeared earlier, if any explanation is needed beyond "he went into the woods in the middle of the night".
Michael finds a steel/iron sword with a bronze handle. They run into a large group of Small Folk. Michael is fighting the Small Folks' champion, sword versus club, when they are overwhelmed by weight of numbers. which is when we find out the dragonette's are energy weapons, because Meirax shoots two of them and they burst into flames. Someone or several someones rescue Meirax. Maybe Lukora or her brother (who might be a werewolf, based on the description of the rescue and his later actions).
My interpretation is that this starts as a scientific expedition into Fairie. This feels thematically similar to Tracking Song. Once again, Wolfe has someone investigating what seems like Earth - maybe so far into the future that land masses have had time to move or rise from the ocean floor. In Tracking Song, there were groups of people who might have been uplifted animals and here, the Small People are non-technological nomadic hunter/gatherers.
This story feels unfinished or incomplete somehow. Lots of interesting ideas but not all tied together. Maybe Wolfe is making it deliberately ambiguous. There's some really great description and metaphor.
*Someone with more knowledge of Greek please check this for me.
** Has Wolfe used this term in another story? It sounds familiar.