Does the Trance trait allow an elf to finish a long rest in 4 hours? The intent is no. The Trance trait does let an elf meditate for 4 hours and then feel the way a human does after sleeping for 8 hours, but that isn’t intended to shorten an elf’s long rest. A long rest is a period of relaxation that is at least 8 hours long. It can contain sleep, reading, talking, eating, and other restful activity. Standing watch is even possible during it, but for no more than 2 hours; maintaining heightened vigilance any longer than that isn’t restful. In short, a long rest and sleep aren’t the same thing; you can sleep when you’re not taking a long rest, and you can take a long rest and not sleep.

Here’s what this all means for an elf. An elf can spend 4 hours in a trance during a long rest and then has 4 additional hours of light activity. While an elf’s companions are snoozing, the elf can be awake and engaged in a variety of activities, including carving a lovely trinket, composing a sonnet, reading a tome of ancient lore, attempting to remember something experienced centuries before, and keeping an eye out for danger. The Trance trait is, ultimately, meant to highlight the otherworldly character of elves, not to give them an edge in the game.

http://dnd.wizards.com/articles/features/rules-answers-september-2015