One of the mysteries of the English language finally explained.
The world, the earth, regarded as a middle region between heaven and hell, or as occupying the centre of the universe. Sometimes also: the inhabitants or things of the world, especially as opposed to those of heaven; worldly things as opposed to divine or spiritual things. In later use chiefly archaic or literary.
Middle English; earliest use found in Layamon (fl. 1250), poet. From middle + earth.
middle earth/ˌmɪd(ə)l ˈəːθ/
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