In Dragon’s Dogma 2, there’s an elf in Vernworth named Glyndwr who probably gives you the wrong impression. He speaks English, whereas his kin do not. However, there is a way to communicate with them using the Woodland Wordsmith specialization.
Your character doesn’t really need to know how to speak the language, it’s actually your Pawns that need to learn Elvish. You need a pawn with a specific specialization in your party, at which point the text, menus, and subtitles for the elves will change to English (or whatever language you’re playing the game in.)
Learn Elvish in Dragon’s Dogma 2, Woodland Wordsmith Specialization
What you’re looking for is a Pawn with the Woodland Wordsmith specialization. Many of the pawns that show up at a riftstone are random but will stay populating that same riftstone each time you revisit it. As such, it might be worth traveling around to check at a variety of riftstones until you find the one with an available Woodland Wordsmith.
The fastest way to check is to simply interact with the riftstone and pull up the list of Pawns within. You can then quickly scan for the needed specialization, then grab that Pawn should they be in your pricerange. These specializations can be taught to your pawn, but I have yet to find the item that allows that.
How to find Elven village Sacred Arbor in Dragon’s Dogma 2
You’ll need a Pawn with this skill in order to talk to the Elves in Sacred Arbor. You can visit that town at any time. It’s located rather far northwest of Vernworth, and west of Melve. If you look at the roads that show through the unrevealed fog on your map, you’ll notice they start twisting up in a knot, and that’s the Malachite Forest. In the very northwest of the Malachite Forest is Sacred Arbor.
If you follow the questline given by Glyndwr, the elf near the weapons shop in Vernworth, you’ll eventually be led there.
Note that you can use the facilities at Sacred Arbor without knowing the language. Menus, like when you talk to the innkeeper, appear in the undiscernable text, but they’re still useable. If you want to buy something at the store (and you should; there’s some great gear there), you kind of have to work using intuition.