This fae creature looks like an elf, but old and hunched over as only a human could be. The hump on its back under its cloak is really a shell that betrays its fae nature. It is perceived by all as very trustworthy and good intentioned, at least in part because this is true. It does not mean to harm anyone who does not attack it first and is fairly useless in combat.
Rather, it wants to keep everyone it meets safe as part of its collection. To do this, it uses its rod with a spyglass in the pommel, looking through the glass at a target and making some reference to its size in order to shrink it. It usually shrinks targets to 1/24 its original size, considering that a good scale for its collections.
My Haven party has just obtained one of these staffs. I will wait until they have figured it out to reveal how the rod works.