If I bring Elder Dragon into a battlefield with Irresistible Faefolk and I have a Sett Kingpin at 10 might, would it trade with that due to matching its might, or kill it and the Faefolk due to only needing one damage for lethal damage?

To determine the outcome, we must look at how combat damage is assigned when you control Elder Dragon and face a unit with Tank.

1. The Interaction

• Elder Dragon modifies the definition of "lethal damage" for any damage you deal: "Any amount of your damage is enough to kill enemy units."
• Sett, Kingpin has the Tank keyword: "I must be assigned combat damage first."
• Combat Damage Assignment (Rule 460.2.c): You must assign lethal damage to units in full according to their requirements before moving to the next unit. Because of Elder Dragon, your "lethal damage" requirement for an enemy unit is 1 damage.

2. Resolution

When you are the attacker and assign combat damage in a showdown where you control Elder Dragon, you must follow the Tank restriction:

1. Assign to Tank: Because Sett has Tank, you must assign lethal damage to him first. With Elder Dragon's effect active, 1 damage constitutes lethal damage for Sett. You assign 1 damage to Sett.
2. Sufficient Lethal Damage: Per Rule 460.2.c.4, you cannot assign more damage than required for lethal damage to a unit unless no other units remain. Since you have met the lethal requirement for Sett with 1 damage, you have satisfied the Tank requirement.
3. Assign Remaining Damage: Once the Tank requirement is fulfilled, you are free to distribute your remaining Might to other enemy units present at the battlefield (such as the Irresistible Faefolk, if they are the defender or also present at the battlefield).

Conclusion

You kill the unit with Tank (Sett) by assigning only 1 damage to him, and you can then assign your remaining Might to other units at that battlefield.

Sett does not "trade" with Elder Dragon in the traditional sense of matching Might values. Because your damage is lethal at 1, you efficiently "spend" 1 Might of your total attacking power to remove Sett from the board, allowing you to use the rest of your Might to kill any other enemy units present.