Its abilities are as follows:
Choosing between Slicing Wind and Evanescence is purely a matter of personal preference -- the former provides more offensive versatility while the latter provides more defensive options. However, it almost seems foolish to pass up the deadly combination of Arcane Blast and Moonfire.
The pain train
Moonfire deals heavy Magic damage and applies the Moonlight weather effect for 9 rounds. Moonlight increases healing by 25% and all Magic damage dealt by 10%. While giving an opposing pet more healing doesn't seem like a good idea, the raw damage on Arcane Blast more than makes up the difference. Arcane Blast's initial spellcast isn't too impressive, but every subsequent use of Arcane Blast increases its damage. There isn't enough healing in the world to keep pace with the Nether Faerie Dragon's damage, so it forces your opponent to attempt to kill you before you can kill them -- and with the Moonlight buff, beating you in a DPS race isn't going to be easy. Unless, of course, your opponent is another Magic pet. Then you're in trouble and need to get a different pet on the field as soon as you possibly can ... and not put Moonlight up in the first place, you dingus.
What the faerie dragon provides is a Magic-based pet that has all of the offensive strengths of a Magic-type without its defensive weaknesses. Your average Magic pet is going to take massive damage from fan-favorite Dragonkin such as the Onyxian Whelpling, but not the Nether Faerie Dragon.
Interestingly, the hybrid battle dynamic introduced by the Nether Faerie Dragon very well may be a bug. The Faerie Dragon's flavor description says:
Much like other faerie dragons, these playful and mystical flyers are born with a natural defense against magic.As a flying pet, the Nether Faerie Dragon actually takes 50% more magic damage than normal. It currently does not possess the defense against magic that its description implies -- it is highly vulnerable to the same type of damage it deals. Based on its name and description, it's likely that the Nether Faerie Dragon is meant to be a Dragonkin. Mechanical pets are the pet type that possess resistance to Magic damage, but that just plain doesn't make sense here. Even if this pet were to be changed to a Dragonkin in the future (and it hasn't yet been changed on the patch 5.1 PTR), the faerie dragon would still possess a unique power set: it would be a Dragonkin with no Dragonkin abilities whatsoever, only Magic and Flying.
There remains the possibility, of course, that the Nether Faerie Dragon was intended to be a Magic-type pet all along, not Flying or Dragonkin, and certainly not Mechanical. It seems like a good possibility, but this pet is just so darn cool as a Flying oddity that we should all hope that it never changes.
Mists of Pandaria is here! The level cap has been raised to 90, many players have returned to Azeroth, and pet battles are taking the world by storm. Keep an eye out for all of the latest news, and check out our comprehensive guide to Mists of Pandaria for everything you'll ever need to know.