Found this conversation on the Whirlpool forums:
Gandalf: I'm a moderator of Middle Earth. This ring, worn by the bad guys, is too overpowered and has to be destroyed. The only way you can get rid of this overpowered item is to take it into the enemy base and cap it on their Crack of Doom (I don't have admin privileges, so I might be tempted to use the ring, so you have to do it)
Frodo: Ok, I'll double-jump into the enemy base. But i need guys to tank for me
Sauron was a demigod, but he put all his hitpoints into the aforementioned ring. When he got pwned by a human, Sauron lost the ring, all his hitpoints and just became a spectator, but a spectator who could voice-chat to everybody in the ghetto of Middle Earth.
The Eye is just Peter Jackson's way of providing an icon that told the audience that Sauron was still on the server, but as a spectator trying to ghost everyone.
Sauron never shared power, but one of his minions was the Mouth of Sauron, who was really just a team-swapper who thought he could get more kills on Sauron's side.
Additinally,
Sauron tricked everybody into making other rings that weren't as powerful as The One Ring. These other rings only delivered mini-crits, but most of the good guys of Middle Earth discovered the mini-crit rings were trojans, and hid them away. Kind of like spyware, because Sauron was using the mini-crit rings as keyloggers
Humans weren't very smart because they didn't know how to use Windows. As a result, a whole bunch of humans got infected by this spyware, and allowed Sauron to client-update them all, turning them into an evil, overpowered clan called the Nazgul. They used to ride horses, but an elf flooded them in a river, and they eventually upgraded to flyers, but they were pwned when Frodo capped the ring
Saruman, the guy who has a similar skin to Gandalf, was deluded to think he could rush Middle Earth with his super-infantry, but was pwned when he got counter-rushed by the talking trees. They destroyed all his factories and his construction yard, and flattened the rest of his base. They let Saruman go, but Saruman sneaked a few units around the edge of the map, and built up a base in the Shire, where Frodo lives. Eventually all the good guys come back to the Shire, and destroy the expansion that was made there. The midgets kill Saruman's peons, and Saruman is assassinated by his pet emo freak, Grima. (kinda went Warcraft there, lol)
Frodo capped the ring, but because he was wearing it for most of the match, he suffers recurring loss of hipoints and the only way to stop from dying is to take a boat into Middle Earth's Hall of Fame a.k.a. The undying Lands. Frodo dropped the ring, and Samwise picked it up, and in doing so became at risk of taking damage later in life. Samwise jumps on the boat before he loses health.
Gandalf goes because his team won the match, and doesn't want to play anymore
The elves go in dribs and drabs because they are getting bored with the Middle Earth map. Elrond has been basically in charge of admin for the Gandalf team, and he's sick of it, so he goes too (he is also tired of keeping the spyware rings away from everyone else). Galadriel goes too, out of clan loyalty. Bilbo's character is about to die from old age, so he's on the boat.
Legolas and Gimli, though not shown in the movie, explore for a while then get bored with the Middle Earth map too. Legolas builds a boat and with Gimli, sails off the map into the Hall of Fame
May I add that when that when Gandalf respawned as the new White class, he was given a Cheater's Lament.
Yeah he got levelled up massively, he got a lot of xp defeating the end-of-chapter boss, the BALROGGGGGG of MORRRRGOTH
I'm actually a little sad because the film didn't show Aragorn re-installing the firmware for the Palantiri. That would have been pretty cool, I liked that part in the books. But being able to shag the elven equivalent of Joanna Krupa is probably good enough for the King
