Galadriel said that the destruction of the One Ring would mean the Elves had two options: either to pass over the Sea, or to remain in Middle-earth, slowly dwindling to a rustic folk of dell and cave (don't remember the exact quote). It would seem to me that the Wood-elves chose the latter option.
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"If you're referring to the incident with the dragon, I was barely involved. All I did was give your uncle a little nudge out of the door."
THE HOBBIT - IT'S COMING
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