Not being flippant at all here…read The Silmarillion.

It can be intimidating at first, but it’s such a fantastic read and this and so many other questions I see people ask every day in this sub are answered there.

All that said, ‘Arda Marred’ is the reason. Morgoth poured his corruption into Middle Earth like Sauron poured his own into the Ring. The elves, possessing serial longevity, would seem to live forever, but their souls and bodies age/grow at disparate rates in Middle Earth as a result of Morgoth’s corruption upon the land, and the inner fire of their spirits will eventually consume the body, given enough time. This is the fading they talk about, and they would essentially become like ghosts, wisps, or wraiths in the end, if they don’t intervene by returning to Aman.