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I suspect the truth is that the Elves have cut themselves off for so long that they've lost touch with what's really gong on in the world. The world they knew has changed & they haven't kept up. They were always essentially a backward looking people. They chose to isolate themselves from all change & ended up being left behind. The fact that Sauron was defeated with so little input from the Elves as a whole surely demonstrates how little they were needed by the end of the Third Age. They were lost in dreams of 'old, unhappy far off things, & battles long ago'. ('For God's sake, let us sit upon the ground
And tell sad stories of the death of kings'). They were no longer capable of being & doing what you expect of them. I think they played the part they were capable of playing. They had lost heart & hope of any victory they would consider worthy of the name. If a whole race can suffer from clinical depression I think the Elves came pretty close to doing so.
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