I like the idea you had for this, and I think your 3D models are really cute. I think the character controller needs some tweaking, because it was a bit tough to control; I was either going way too slow or way too fast, and I had a hard time consistently activating my mallet to bonk the elves. I think modifying those inputs could make a big difference :)
For UI, I would also suggest choosing colours with better contrast for your menu background and text. I was getting a bit of a headachey 3D effect that really hurt my eyes trying to read it.
Great effort on this one, keep it up!