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The exiled are what comes from a contract broken and a madness unleashed. The power of fae magic may be great, but even they have rules and laws based in the contracts of their eternal insanity. For whatever reason, some of the fae were cast out of Faerie, but this never lasts forever. A condition normally follows their banishment, whether it be the dreams of a thousand madmen at the same time, or the blood of a court's king or queen at high noon at the summer solstice.
After an amount of time across the border of the Hedge, their power begins to fade and they become what they thought to be so pitiful: Humans. Irony still plays its part as fate punishes them for their misdeeds; they lose their contracts and are unable to create new ones.
Being cast out of a land like Faerie is normally a blessing, but to the denizens of that wretched nightmare, it's their worst fear realized.