In fact, the production's budget was so limited that they had to “shoot on the fly” in New York with a small crew using “guerrilla” style. All of the scenes were “real,” everything from Ferrell walking through traffic to interacting with people on the street.

How did they shoot the movie Elf?

In Elf, for example, the cast were obviously not real elves, but a method of shooting them to look small had to be found – and the options were either to use CGI or employ practical in-camera effects. ... Instead of using CGI, Favreau insisted that practical effects were used to create the look.

How did they make Will Ferrell look so big in Elf?

The North Pole sets were built for perspective.

The teams worked with a two-thirds scale that would allow Ferrell to seem bigger than his elven counterparts. Afterward, the crew would adjust the height of the cameras and objects to bring the optical illusion to life.