FE Exchanges are where you are assigned so many cabins (or guests, depending on how it is set up) to gift to and then those people will gift you in return.
Pixie Dusting is giving random gifts with no expectation of anything in return.
We used to Pixie Dust guests but then I started thinking about how much of those little items likely end up in the trash before they even get home. We have shifted to Pixie Dusting the crew members that are unable to accept tips (baskets full of snacks- crew can pick their item to avoid allergies, magnets for their cabin, things like that) because they make such a difference to our cruise experience.