If my opponent plays Elder Dragon and I play Janna Savior in response to the targeted Lillia Fae Fawn, would Janna heal Lillia and Lillia lives? Or would Lillia die from Elder's initial target?

To answer your question: No, healing Lillia, Fae Fawn with Janna, Savior will not save her from the damage dealt by Elder Dragon’s play effect.

Reasoning

This interaction relies on Elder Dragon’s passive ability, which fundamentally changes how lethal damage works for units damaged by its controller:

1. The Triggered Ability: When your opponent plays Elder Dragon, its "When you play me" ability is placed on the chain, targeting your Lillia, Fae Fawn.
2. The Passive Ability: Elder Dragon’s passive ability states: "Any amount of your damage is enough to kill enemy units." This modifies the definition of lethal damage for any unit that has damage marked on it by the Elder Dragon's controller.
3. The Resolution:
   • You play Janna, Savior in response to the Elder Dragon's trigger.
   • Janna's triggered ability resolves first: She heals your units at that battlefield, removing any pre-existing damage on Lillia.
   • The Elder Dragon's triggered ability then resolves: It deals 1 damage to Lillia.
   • Because the Elder Dragon’s controller is the source of this damage, the passive ability recognizes that the unit now has damage marked on it by that player.
   • Per the modified definition of lethal damage, that 1 damage is sufficient to kill the unit.

Healing the unit before the damage is dealt does not protect it because the damage event itself creates the condition—marked damage from the Elder Dragon's controller—that triggers the modified, instant-kill lethal threshold.

Sequence of Events

1. Play Phase: Opponent plays Elder Dragon. Its triggered ability is placed on the chain, targeting your Lillia.
2. Reaction Window: You play Janna, Savior in response to the Elder Dragon trigger.
3. Resolution:
   • Janna, Savior resolves: Lillia is healed.
   • Elder Dragon trigger resolves: Lillia takes 1 damage.
4. State Check: Because Lillia now has damage marked on her by the Elder Dragon's controller, the passive ability applies. Since she has non-zero damage that is considered lethal, she is killed.

This interpretation is consistent with RiftJudge FAQs #10786, #10289, and #9964.