Imagine six positions.
The shortest elf is in position 1. The tallest elf is next to him, in position 2. With this orientation there are 4x3x2x1 (4!)=24 different ways the last four elves can be lined up. This is because four different elves can be in the first position, three in the second, two in the third, and one in the last. It might take a while to get, that's alright. Anyway, this means there are 24 different ways that the elves can be lined up with the shortest and tallest beside each other IN THAT ORDER AT THAT END. Remember that.
Now imagine the two elves moving together down the line of elves, switching positions, and then moving back. This will give us all cases where the two elves are together. There are 10 cases.
If we do the same calculation for each one, there are still 24 possibilities for how the other elves are arranged for each position that they are in.
This means that there are 10x24=240 different cases where the shortest is next to the tallest.
Now the probability needs to be calculated. To do this we divide the number of cases of interest (240) by the total possible number of arrangements, whether the elves are together or not. To do this take 6!, with the same reasoning as taking 4! before. This should give a total number of 720 permutations (or cases).
Now, 240/720 = what? I'll let you figure the answer out :)