Theory: Fairies are about as powerful as the 'status' of nature in comparison to everything else. In the moden world, where we've more or less subjugated nature, fairies are powerless if not non-existant entirely. In Gensokyo, which has towns and settlements but ones that are more in harmony with nature by comparison, the fairies are far more powerful but still weak, as the settlements still dominate the relationship. In a completely wild setting, or one where nature has retaken the cities and towns, fairies would suddenly be more powerful.
Extension: Fairies are powerful in the Garden of the Sun, but Yuuka counts as the garden itself for power. Thus, she dominates the area and is far more powerful. In, say, the underground, the fairies are also simlarily powered, but the Hells could be considered 'settled' (due to the furnaces and apparent disposal system Orin works), and thus they are less powerful in comparison.
Just a thought. Would also explain why fairies don't spontaneously reappear in buildings and such at respawn, or in your face at all. I'd imagine that'd be annoying/surprising/irritating.