Celtic Mythology was also a source of great inspiration for Tolkien's Elves, yet not all historians particularly enjoyed Tolkien's recreations. John Garth once suggested that Tolkien was rewriting Irish fairy traditions with his Elves.
His strong Catholic theology also played a large part in the creation of his Elves. His idea for them was to be much as the state of Man was in the Bible before the fall from grace in the Garden of Eden. The immortality and wisdom instilled in the Elves is proof of these views. In a letter to a friend, Tolkien says that the Elves generally represent Men, but with greater artistic ability, beauty and longer life span.
The Awakening of the Elves
Although Tolkien wrote about Elves in some of his earliest poems and writing, it wasn't until after his most popular books were written that he went back and detailed the origins of the Elves. According to his earliest account, the first Elves are awakened by Eru Ilúvatar near the bay of Cuiviénen during the Years of the Trees in the First Age. They awake under the starlit sky, as the Sun and Moon have yet to be created. The first Elves to awake are three pairs: Imin ("First") and his wife Iminyë, Tata ("Second") and Tatië, and Enel ("Third") and Enelyë.
Throughout early journeys, these "first" Elves soon found other sets of Elves that have been awakened throughout the Cuiviénen area, explaining very simply how there are the different types of Elves. In all, there were 144 original Elves awakened.
During the Sundering, Valar summoned the Elves to Valinor. During this trip, the Elves became divided, either through unwillingness to follow, fear of crossing the Misty Mountains or other reasons. This is how the original settlements of the Elves began, and how they were able to spread themselves all across Middle-earth.
As in most classic historical struggles, the Elves had their own nemesis who fell from grace to lead an army against the rest. Once known as Melkor, the Elven Morgoth "The Black Enemy" rose up to ultimately become the original dark force of Middle-earth. He trained Sauron as his lieutenant and is blamed for the creation of the Orcs. Curiously enough, in Tolkien's original stories, it is said that Morgoth created the Orcs through the corruption of Elves, yet he later recanted that story. Regardless, the corrupted Elf theory remains the most popular story on the origins of the Orcs.
Referencing our previous look at the Rings of Power, we see that the entire War of the Ring centers around the Elves and their forges. Once that war was over and the One Ring was destroyed, the Age of Men would begin and the Elves would continue into a slow decline. Over a period of thousands of years, Elvenkind faded in power and nobility, ultimately diminishing completely. This is how Tolkien explains their solid place in folklore, but not in future existence.