Sauron has been defeated, Barad-Dûr pulled down. The One Ring is no more, destroyed in the very fires that created it. The power of The Shadow is vastly diminished.
The Wizards, many elves, the ringbearers, and a single dwarf have all sailed west. But all evil is not fled from the land. One question remains: the Nine Rings given to Men, and the Seven to Dwarves—what became of them? As memory turns to legend, and legend to lore, those who hear the stories wonder: Where are they, 200 years later, and who, if any, wield them? How much shadowed influence remains in these rings? What of their once-fabled power—did they diminish with the One Ring, or does their power yet remain?
Nirimbor, styled Elessar II, rules Gondor as King of the West from Minas Tirith, with the same Númenorean blood running through his veins as his father, Eldarion. Osgiliath has been rebuilt and re-peopled, and Minas Morgul's dark corruption steadily fading. Gondor's Reunited Kingdom stretches from Arnor to Harondor, from Andrast to Ithilien. Long has it kept its watchful guard on the East, and even now, hundreds of years after Sauron's fall, it still falls to Gondor to keep the peace. Much is laid upon the King—the administration of multiple kingdoms, the keeping of many Princes and their realms, and of safekeeping his people. The young king is eager to prove himself a worthy successor, both to himself, and to Gondor.
In Meduseld does Éowyd Queen rule from her Golden Hall. Here, the Queen rules from Isengard almost to Mordor, her Riders keeping the peace and keeping ready for war. Much of the trade from the Dwarven kingdoms, Lake-town, and Gondor flows through Rohan (by her leave and at her price), and her Rohirrim are in no small demand as escorts and mercenaries.
Though trained from her youth in battle as a fierce shieldmaiden, yet does she find instead much more need of soft words and quick wits, as she treats from those of many lands, brokering agreements and treaties with all those who view Rohan as the road through which they must pass.
King Brom rules from Dale, in the shadow of Erebor. Down the River Running, Lake-town flourishes under the hand of its current Master, Rorn, chosen by the people and approved by King Brom. His relationship with the dwarves of the Lonely Mountain is strained of late—great is their greed and few are their promises kept, in the King's eyes. Two capitals cannot easily sit so near each other—one's influence must wax while the other wanes. Still, relations are not as bad as they have been in the distant past. Trade remains good even if they are not called to visit one another's feasting hall. The king keeps his armies ready for any threat—be it from the north or the east, to protect the many villages and farms that have sprung up alongside the River.
The shadowed land is much changed since the fall of Sauron. After destruction of The One Ring, massive explosions reshaped the land, and the continual ash-fall temporarily blanketed the land, with few survivors. Over time though, the ash fed the ground—while it is still a desert, the land is no longer the barren wasteland it once was. Not nearly as fertile as Núrn, to the south, but livable. Shadows yet lie here, but even the most evil beings here have learned lessons from the fall of its great king. While many clans keep to the old ways of raids and slavery for food and power, some have learned to trade with their human neighbors (or at least not get caught).
Orcs, humans, goblins, half-breeds, sorcerers, undead, and other dregs from Sauron's army vie for control here—each clan staking out a territory of crude buildings and land, fighting over leftover magic relics, Sauron’s trove of wrought mithril, and other hidden secrets.
The Fourth Age has been a dramatic shift for the race that once ruled all of Arda. Many of their people have sailed West, and those that remain now grapple with the elves' place in this increasingly mortal world. With so much of their culture and memories no longer part of Middle-earth, elves have been forced to adapt. With this, their signature pride, aloofness, and apathy have been blunted somewhat as they seek meaning outside Aman. Their craft grows in its own ways—no longer a pale imitation of Beleriand but its own, new work. After the last ships left the Grey Havens, and with it knowledge of how to build and sail them on that narrow course, the remaining elves looked at the world they had decided to stay in and decided against that slow decline of the Third Age. Now, hundreds of years later, there are many new, young elves, to whom the past is history instead of memory.
Elves can still be found in Mirkwood, in Lórien, and in the eastern Havens, but they can also be found throughout all Middle-Earth. Some have made their home in exclaves inside Gondor or Dale, and some can even be found in the human cities and towns, no longer as reclusive as their ancestors. Some few are even rumored to live among the dwarves. Elves can be found serving as loremasters, as smiths, rangers, or even learning to harness the magics of their ancestors.
Aglarond. Khazad-dûm. The Kingdom Under the Mountain. Thorin's Halls. These are but few of the city-states that are now part of a golden age for dwarves. With mithril flowing once again, and peace in the land, dwarven craft has improved significantly. Some dwarves, however, are not as keen to share in trade their works as some of their kin, the greed in their blood flowing stronger in some lines than others.
In Moria, Dúrin VII rules, having cleared out much (but not all) of the mines. Thráin III, a cousin to Dúrin sits upon the throne in Erebor. Burin III rules with Éowyd's approval in the Glittering Caves. Dwarves can also be found in the Blue Mountains in the West, as well as the Grey Mountains in the north. In smaller numbers, dwarves also live among the humans of Gondor and Dale.