This is our 3rd year of doing Elf on the Shelf. I started when my oldest was 3 and understood the concept.
We usually start this after Thanksgiving. Zeke is our Elf's name and where the kids need a little boost of encouragement in the behavior department is where Zeke usually shows up the next day. For instance - if they had a rough night during bathtime...Zeke is there in the morning. Haha.
We do Santa a little differently in my house. Santa only brings items we need (socks, etc) and one special toy in the stocking. Partly because my husband wants credit for the big under the tree items and partly because we aren't heavy Santa believers. Sure we partake in the fun but we make sure our kids know the real reason for the season.
Here are some places Zeke has shown up...
Sometimes he is in boring places like on a shelf and sometimes he is a bit of a rascal.
Have fun with it!