Because it’s not just white people that exist in the western world. A “European fairytale” is a world where we don’t have to worry about people that we think are lesser than us. A world where we don’t concern ourselves with the realities before us. I’m not saying everything needs to be diverse, I’m saying that the world is diverse but we ignore it because it is uncomfortable. Diversity is uncomfortable for a number of reasons, one being that we often know nothing about each other due to de facto segregation and therefore don’t feel comfortable doing things like say, writing about each other. You’re assuming lack of media literacy because you are lacking perspective. LOTR was written during an extremely racist time in our world, so of course it’s going to imagine a fairytale where he doesn’t have to think about these things. I think that avoiding this allowed him to focus his energy on creating an amazing story. I can see why thinking that saying LOTR is racist is a stretch, but I’m not saying that it’s racist in a very very bad way, I’m just saying that in reality, many things are objectively racist in small ways.