It’s not perfect. How in the world they left out the penultimate “Scouring of the Shire” is still something I shake my head about.
I believe the problem was pacing; we've just spent nine hours (twelve in the director's cut) in three movies, and the One Ring & Sauron are finally destroyed...and then we're going to take 20 minutes to show a bunch of ruffians being run out of The Shire? And then show 20 minutes of endings tying up plot threads? In a movie, it just wouldn't work well.
The book is another matter, of course.