Here is the guide for finding every Great Fairy in the game (excluding the Queen). They are import because they increase your money, arrow, bomb, and Magic amount. Note: it doesn't matter what order you do any of these!

Arrow Upgrades
Western Fairy Island(A3): Hit the peg with the Skull Hammer and walk in to increase your arrows.
Thorned Fairy Island(G4): Again, pound the three pegs with your Hammer and walk inside.
Rupee Faries
Northern Fairy Island(C1): Bomb the large boulder to go inside.
Outset Island: Go inside the Fairy Forest and bomb the big rock.
Bomb Fairies
Eastern Fairy Island(E3): Bomb the wodden gate to go inside.
Southern Fairy Island(D6): Bomb the Wooden gate to go inside.(Sense a pattern?)
Magic Upgrade
Two-Eye Reef(D7): To get this upgrade, go to the ring of Seagulls to fight a four-eyed octo. Use bombs, the Boomerang, and the arrows and the battle's yours. After will see a cinematic and you get your magic meter doubled! SWEET! » link