The Lord of the Rings has lots of different kinds of people: elven people, dwarven people, tree people, half-sized people, even people people.
There's like a million pages of background explaining this world that goes much deeper than the books or the movies, but if you don't want to read it all here's a four minute summary, starting with Wizards:
It's easy to mistake the wizards as humans trained in magic, like elsewhere.
But in the Lord of the Rings, wizards are low(ish) level angels. They're called Istari (get ready for lots of names in this video) and there are five of them -- Sauroman the White, Gandalf the Grey, Radagast the Brown, and the two blue wizards.
Their power comes mostly from being supernatural and not so much from book learnin'.
They're sent (by who? We’ll get to that in a second.) to help the people of world stand against evil -- not wildly successfully either. Sauroman, the leader of the five with a mind of metal and wheels gets corrupted, Radagast, gets distracted by all the pretty nature, the blue wizards just kind of fade into the East -- possibly starting cults of magic and it's only Gandalf that stays true to the quest.
Now, where there's angels there’s a god and in this Universe that's Eru Ilúvatar.
In the beginning there was naught but Eru and the infinite timeless nothing, which is rather boring so he created lots of angels to keep him company.
Ilúvatar 's angels are called the Ainur and are divided into two groups The Valar (Guardians of the world of which there are fourteen or fifteen depending on who you want to count) and their servants The Maiar.
The Wizards are the Istari a subset of the Maiar, which serve the Valar, all created by Ilúvatar.
Ilúvatar and all his angels sang together to make the world. The harmony started out great But there was one Valar named Melkor, and just from the name Melkor, you know what's going to happen, even before learning he's also the smartest, and the most powerful of the angels. And also a bit of a loner.
Melkor didn't want to just be part of the chorus like his dimmer Valar co-workers, he wanted his own song and creations and so his voice became discordant from the others and... created all the suffering and evil in the world.
But Melkor's song also attracted some Maiar to his side including the balrogs. Which means the balrog is a low-level angel making him on the same level of the power org chart as Gandalf: which explains why an old man can hold his ground against a giant lava monster.
Through his discordant singing Melkor also created some of the evil creatures in the world such as the dragons and trolls. Which finally gets us to things that aren't angels.
Other Valar, also made their own non-angelic creations, though in a cooperative spirit with Ilúvatar.
Manwë makes the Great Eagles.
Aulë made the dwarves and his wife Yavanna made all of the animals and plants in the world before capping off that minor task with the Ents, her own race of sentient creatures.
While Ilúvatar seemed happy to leave it to his Valar to make most of the stuff -- he did personally create men and elves which makes them special and kind of above all the other living creatures. (Sorry Dwarves)
And of these two, the men are Ilúvatar 's favorite children: and he show's this by giving men shorter lives than everybody else and also the gift of death? Thanks a lot, Dad. But their short lives set them apart from the other creatures and they aren't tied to the music of creation and the world like everyone else and so are the able to forge their own futures. These qualities make them the get-stuff-done species of middle earth.
Elves, on the other hand, are so connected to the world they're practically made of nature. Same with the Dwarves in their own way, and the Ents of course. These species all but follow the flow of nature and it's partly why the humans have such a hard time getting them to do anything.
Even when faced with armies of Orcs, which brings us to Orcs. Melkor was powerful but couldn't make his own creatures as great as the elves and men and so cheated by corrupting some of them in the beginning and selectively breeding them over the generations into these creatures.
This business Melkor was up to of torturing elves, making monsters, recruiting angels from the other side eventually, but unsurprisingly, led to a war that Melkor loses and got him banished into the void.
All of the conflict in the Lord of the Rings comes long after the epic good vs. evil fight of that universe. Sauron, the Big Bad who caused all of the trouble in these books was just one of the Maiar, though an unusually powerful one, who started his career as Melkor's lieutenant -- after the war he did make a ring to focus his strength, but that's a story for another time.
Last, but not least, we have the hobbits. Even though they seem related to dwarves, what with the living underground and the vertical challenge, hobbits are a subspecies of men. For such an important and pivotal race there is little written of their origin other than the phrase 'related to men.' Turns out with a million pages you still can't talk about everything, just like in a four minute video.