1: An imaginary girlfriend who is a construct of a young man's imagination, especially fantasy nerds. A variation of this is space woman, where a sci-fi geek will invent a girlfriend that does not exist anywhere but in their head.
2: The alternate spelling, "faerie woman" is used to describe a female geek or nerd who knows a lot about the mythology of the Celts and or the British Isles. The inference is that she knows too much about Faeries to be a genuine human.
1(a): I'm worried about Neville, his girlfriend seems too much like a fairy woman to be real. He needs to get out more.
1(b): Fogle: Sounds like your girlfriend's a fairy woman.
Cedric: Her kisses are magical.
Fogle: Dude, I mean that she isn't real. Get a life.
2: Gee, Mary's a faerie woman. She reads so many Irish Folk Tale books that it's scaring me!