I read that "The Machine Elves" are more associated with LSD than DMT. Perhaps they activate different parts of the brain associated with object recognition - LSD for humans and faces, and DMT for insects/reptiles as other comments have speculated - it makes me wonder what myriad other substances out there that we haven't discovered yet and what otherworldly effects they could have.
"Machine Elves" was coined by Terence McKenna to describe the beings in the DMT world. He didn't do much LSD and wasn't a big fan of it.
Maybe others have had different experiences but at the very least the origins of the term are tied to DMT.