The words she, sidhe sound the same but have different meanings and spellings. Why do she, sidhe sound the same even though they are completely different words?
The answer is simple: she, sidhe are homophones of the English language.
Used to refer to the woman or girl previously mentioned or implied. See Usage Note at I1.
Used to refer to a female animal.
Used in place of it to refer to certain inanimate things, such as ships and nations, traditionally perceived as female: "The sea is mother-death and she is a mighty female” ( Anne Sexton).
A female animal or person: Is the cat a she?
Alternative capitalization of sidhe.
Definitions from The American Heritage® Dictionary of the English Language, 4th Edition, from Wiktionary, Creative Commons Attribution/Share-Alike License and Wordnik.
Homophones (literally "same sound") are usually defined as words that share the same pronunciation, regardless of how they are spelled.
If they are spelled the same then they are also homographs (and homonyms); if they are spelled differently then they are also heterographs (literally "different writing").