You're close. For me, it was the description. Even though I was 13 when I read it, the pictures are still fresh in my mind. The setting was a part of that, but the "great moments" were just as important to me. (This could be why the movies were a travesty to me, and the hype even more so, since I was chastised for having my own opinions of it. The scenery in the movies was just too soft and... wussy looking... to do his descriptions justice.) I believe Tolkein made this so effective by writing poetically, though I've heard that some people find that annoying.

  It really, really, really ticks me off when I see a comment on Elfwood saying "actually, your character isn't an elf, because they look like such-and-such..." How do you know!? It's fantasy! You can't be narrow minded about what constitutes a species in an original story! Or when they call Quenya, Elfish. Tolkein didn't say you had to plaigirize his language just to make your elves foreign!
  Grrrr....