lotr used really really REALLY good, custom-made wigs. we're talking full lace, hand-tied, human hair wigs.
a good wig like this takes expert skills and time to make and can cost thousands and THOUSANDS of $$. In a fantasy production where each of the main cast needs at least several wigs during the production due to styling needs, damage, continuity issues etc. the cost of those wigs $ can add up.
Most human hair for wigs comes from Asia and is bleached and then dyed to the desired end-color. Lifting black or nearly black hair to pale blond and then toning it causes a lot of damage to the hair - meaning that even if the end color is good, the hair can still look processed and "crunchy". This can stand out in a fantasy production where stuff like people's hair is supposed to look 'natural'.
Wigs can also look less natural if the texture of the hair doesn't match the person wearing it - LOTR used virgin northern european hair for their wigs (this is some of the most expensive $$ hair to source for wigmaking, especially in the lengths they needed), which means the texture is more "natural" for the (almost entirely) white cast, and tends to have more 'natural' dimension in tone and color as the hair underwent a lot less processing before it ended up on the actors.
Additionally, some wigs are synthetic, or a mix of human & synthetic hair, and while there are very nice synthetic wigs, it's very hard to give them those natural whispy flyaways stray hairs, and natural hairline that make a great wig seamless.
really all of these reasons can be summed up as: 💰 budget 💰 budget 💰 budget
tl;dr: Despite production budgets for big film & tv absolutely EXPLODING in the past 20+ years, that $ isn't being allocated to actual crafts & craftspeople.
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