The gifts of Iluvatar are considered both a blessing and curse, for the elves and for the men of Middle Earth. To the elves, Iluvatar gave long life and great love for Arda. To the men, He gave death and the ability to leave their world. Are these blessings? Or are they curses, as many would call them?
The gift of the Elves seems to us quite attractive. We yearn for immortality, power, prowess. But is this a good thing? There is much to learn from Tolkien’s elves. They must endure the passing of time, the loss of loved ones, the loss of the freshness and wonder at the world. The elves grow weary of Middle Earth. This can be seen in their gradual removal from the cares of Middle Earth. From the first to the fourth age, they seclude themselves within bastions of their past glories. They become nothing more than a myth.
Look at Legolas. Upon entering Fangorn forest he is struck by its age and magesty. Later, hearing the gulls, he is moved by the beauty and passion of their call to the sea. He recovers his awe of the world.
And what of men? Here I see Tolkien’s Catholic faith come to the fore. Not necessarily in any overt plot or character, but in his choice of words: gift. Death is a gift. Through the knowledge of our own mortality our experience of this world is made all the more valuable. Life is limited. It is this fact that makes us cling to life and see its value. Yet we, as the Numenoreans, search desparately for ways to lengthen life, to hold off death inevitably. We spend so much effort, we forget to actually live our life. Yet isn’t the sweet more sweet when rare? Would we grow as the elves of Middle Earth and fade out of existance and care? The enjoyment we have in life is enjoyable for the simple reason that it is short.
This still does not explain why death is a gift. Well, that answer is easy. Men leave the plane of this world, they go to another place, unknown to elves. They leave Arda to go to another place, presummably Heaven. Here is the gift of men: to die and be reborn in Heaven, with God.