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The Men of the West lived in the West of Middle Earth (duh), especially the descendants of Numenor who came from further West across the sea. The remaining Elves lived in the West where it is nearest to Valinor, from which they came so many ages ago. The Dwarves were drawn to the West following the other Children of Illuvatar into the events of earlier ages, then stayed to live in their great mountain homes of Moria and Erebor.

All that is good live in the West. Why are there none in the East? Why do all in the East serve Morgoth and then Sauron? I have heard the Eastern Kingdoms have their own chieftains and kings, though they owe ultimate allegiance to the dark lords. So Mordor doesn't extend that far east to encompass over half of Middle Earth, or those Easterlings wouldn't get to enjoy having their own dominions.

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  • Agreed. Especially read Darth Melkor's answer (particularly the bottom section), discussing that the "virtue" in the west is a result of the influence of the Eldar and Númenóreans, while the "lack of virtue" in the East and South is due to the lack of that influence
    – Jason Baker
    Sep 6 '16 at 1:17
  • The Dwarves spread in both directions; they "awoke" at Mount Gundabad, and some went West (Belegost and Nogrod), some went South (Khazad-Dûm), and others went East (unspecified). (Possibly some went North as well, as something was up there. Durin's folk are specifically mentioned as moving North from Erebor after its initial founding, before Thror returned there.)
    – chepner
    Sep 19 '19 at 20:22