The story has very strong roots in the Dutch/Northern German culture. These two cultures are extremely similar from their language to their mythology, including the mythology of little people ie: Fairies, Dwarves etc. According to the folklore Dwarves are a category of fairy that live underground and carry on with very similar behavior to humans. Looking at the story of Rip Van Winkle we find very common events that are present in most fairy literature dealing with Dwarves.
In advice with dealing with fairies and Dwarves it is recommended that people stay away from knolls and hills for this is were many of the little people dwell. In one German folktale there were a group of dwarves that lived in a knoll. When the poor people of the town were in need they would go to the knoll and knock on it. When the dwarves responded the poor townsperson (or people) would make a request for their need. The dwarves would happily comply; in return the people that were given the gifts would leave a thank you present at the knoll for the dwarves. There are several other stories involving fairies, knolls and the interaction of humans.
In many cases humans felt that they had to protect themselves from fairies, not all were intentionally harmful, especially in the case of dwarves but the libations and goings on of the little people does not agree well with human physiology. In folktales where people accidentally come across fairies dancing and are lured in find it impossible to stop dancing. They continue with the dance until they die from exhaustion. Similar cases occur with fairy wine. To say that beer and ale are important to the German culture is an understatement. To drink the same drink as one of the little people would be dangerous, it could cause a person to sleep for years as with our friend Rip or it could kill a person.
Another common trend in the fairy mythology was the time of day in which fairy activity occurred. It is during the evening or early morning hours when it isn’t quite day and not quite night when the fairies would come into the human realm. It was during the early evening that Rip Van Winkle decided to relax upon the knoll and was then visited by the dwarves.
Rip Van Winkle is another classic tale created by Washington Irving that catches the essence of colonial New York. These little bits of mythology are cultural remnants from the Dutch that were brought to the new world that made what our country what it is today.