Artist Wayne Hagg is a senior level matte painter responsible for many of the remarkable paintings from The Lord of the Rings. He started his career with The Fifth Element and has continued on successfully from there. Matte Paintings are painted or picture compilations of landscapes, sets or distant locations that would be way to expensive to recreate. It allows filmmakers to create the illusion of an something not able to be created.
Here is a link to a fxguide article discussing his work:
Matte Painting - Wayne Hagg
Here are a few examples from The Lord of the Rings: