The Valar knew the elves would be appearing in Middle Earth and were excited for their arrival, so that they might have beings to teach and guide. Aule was the god of forging and mining, as Vulcan was to the Romans. He grew inpatient and created dwarves out of stone. The other Valar were pissed about this so he was forced to put them to sleep until after the Elves appeared.

Yavanna, the god of living thins, was very concerned about the Dwarves and what they would do to her forests once they woke with their axes. So she was given permission to allow spirits to enter trees so that they might act as shepherds to the forests. Recall Elrond's message to Gimili about being careful about what trees he uses his ax upon.

According to tolkiengatewat.net/wiki, Tolkien invented them while writing the Two Towers. My guess is that he needed them to rescue the hobbits from Saurman and to add historic depth and mystery to his tale. A fairy tale comes alive sort of thing. They also link back to Old Man Willow in Fellowship of the Ring.

As far as splitting the story to follow the different characters' arcs, that is not the change in prose I have asked you to watch for.

We've talked before about Tolkien's desire to create a mythology, not merely a fantasy story. This was import to him and I think you see the elements of that in LOTR, as you have just discussed.