Because it was Middle-earth's battle - not Valinor's battle. Middle-earth had to come together and learn to stand on its own, just the way the hobbits were left on their own when it came to the Scouring of the Shire. That's what their whole journey was about - they had to learn to protect the good they knew without having to depend on others.
You must realize that Tolkien's terms for these peoples do not make them the same as those who share their names outside of his works. The wizards weren't great sorcerors that spent their time learning magic all of the time, just as his elves, orcs, etc. are unique. Gandalf did display a number of "magic spells" if you want to call it that, put it's not the traditional magic you've learned to associate with the word 'wizard' - he blocked the entry of the Witch-King at Minas Tirith, he turned away the Nazgul in Siege of Gondor, and did different things in aid of Bilbo and Thorin's party - saved them from from Bolg's goblins under the Misty Mountains, saved them from the wolves on the east side of the Misty Mountains, appeared in between Thranduil's elves, the Men of Dale, and the dwarves to stop them just before the orcs and wargs arrived, etc.
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At that moment he caught a flash of white and silver coming from the North, like a small star down on the dusky fields. It moved with the speed of an arrow and grew as it came, converging swiftly with the flight of the four men towards the Gate. It seemed to Pippin that a pale light was spread about it and the heavy shadows gave way before it; and then as it drew near he thought that he heard, like an echo in the walls, a great voice calling.
‘Gandalf!’ he cried. ‘Gandalf! He always turns up when things are darkest. Go on! Go on, White Rider! Gandalf, Gandalf!’ he shouted wildly, like an onlooker at a great race urging on a runner who is far beyond encouragement.
But now the dark swooping shadows were aware of the newcomer. One wheeled towards him; but it seemed to Pippin that he raised his hand, and from it a shaft of white light stabbed upwards. The Nazgűl gave a long wailing cry and swerved away; and with that the four others wavered, and then rising in swift spirals they passed away eastward vanishing into the lowering cloud above; and down on the Pelennor it seemed for a while less dark.
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Just at that moment all the lights in the cavern went out, and the great fire went off poof! into a tower of blue glowing smoke, right up to the roof, that scattered piercing white sparks all among the goblins. [...] The sparks were burning holes in the goblins, and the smoke that now fell from the roof made the air too thick for even their eyes to see through.
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Suddenly a sword flashed in its own light. Bilbo saw it go right through the Great Goblin as he stood dumbfounded in the middle of his rage. He fell dead, and the goblin soldiers fled before the sword shrieking into the darkness.
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He gathered the huge pinecones from the branches of his tree. Then he set one alight with bright blue fire, and threw it whizzing down among the circle of the wolves.
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Then Gandalf climbed to the top of his tree. The sudden splendour flashed from his wand like lightning, as he got ready to spring down from on high right among the spears of the goblins. That would have been the end of him, though he would probably have killed many of them as he came hurtling down like a thunderbolt. But he never leaped.
Just at that moment the Lord of the Eagles swept down from above, seized him in his talons, and was gone.
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<font size=1 color=339966>[ 2:44 PM January 06, 2004: Message edited by: Legolas ]