From A letter by J.R.R.Tolkien to Milton Waldman, 1951 (from the Silmarillion):
In the first we see a sort of second fall or at least 'error' of the Elves. There was nothing wrong essentially in their lingering against counsel, still sadly with*(Some words of the original manuscript were omitted by the typist in this sentence) the mortal lands of their old heroic deeds. But they wanted to have their cake without eating it. They wanted the peace and bliss and perfect memory of 'The West', and yet to remain on the ordinary earth where their prestige as the highest people, above wild Elves, dwarves, and Men, was greater than at the bottom of the hierarchy of Valinor. They thus became obsessed with 'fading', the mode in which the changes of time (the law of the world under the sun) was perceived by them. They became sad, and their art (shall we say) antiquarian, and their efforts all really a kind of embalming - even though they also retained the old motive of their kind, the adornment of earth, and the healing of its hurts.
There is so much interesting in this part of the letter alone (and I am tempted, though I do not have the time, to type basically every single sentence from this letter to tumblr and share my thoughts on them...)
So, first of all, that is an interesting definition of fading that I have to think about more. I always thought fading was more not being able to cope with the world anymore, being to hurt or to sad. This just seems to be ignoring the world more and more, and does not need to be in any connection with personal trauma. It's just that they are not willing to perceive that the world changes around them, so they ignore it until they are not living in this reality anymore.
Then there is the fact that Tolkien gives the Elves much less noble motives. It's not that they love middle earth, or want to help, or are not ready; they are simply arrogant and want to stay where they are perceived as noble and high.
I do wonder what it says about Valinor, of course, that Elves there do feel undervalued, low in the hierarchy. Isn't this supposed to be paradise? I feel like that might be a christian influence, paradise being a place where everyone is lowly worshipping the gods, but I don't know for sure. Additionally, we just learned that the exiles will not be permitted to even reside in Valinor proper permanently, but will be force to live on Tol Eressea - this might be nice and more interesting, but the fact remains that they do not get a choice. They are treated as Elves of lower standing because they did not always live worshipping the Valar.
Next, there is the part about them making only antiquarian and embalming art. I am going to make another post about all the information on the rings of Power (and the definition of Power) in this letter, but at this point I'd like to mention that that is exactly what lets the Elves fall to Sauron - they want to embalm and preserve, without accepting change.
I am going to ignore the part where Tolkien calls some Elves "wild Elves" and what exactly he means by that. For someone who seems to understand that these people would rather not be treated as people of second, or lower, class, he keeps reminding us that their is social hierarchies of birth.
And lastly, I wonder if Tolkien means this to be something prevalent, or something all the remaining Elves thought, or just something that some of them thought. If he thought they were consious of this reason. He continues talking about the reals of Gilgalad, Elrond and Eregion, and at least Elrond is an important figure in the future (and his mentions in this letter also deserve their own post), but the Elves of Eregion specifically fall under Sauron's thrall because they want to have their paradise on Middle Earth, and both Elrond and Gilgalad later wear one of the rings that were created for this purpose.
So many things to think about! Tolkien's compact summaries of the history in this letter are so fascinating...