"Tolkien and Amazon's Fight for a Franchise":
What the Tolkien estate sold was the rights to the Second Age, but reportedly not the parts of those stories told in the books primarily about the First Age (the Silmarillion, etc.) At the same time, Amazon cannot contradict those stories either. Amazon’s series will have to be consistent with the Tolkien canon, while at the same time drawing on the vaguest, least detailed portion of it...
Tolkien scholar Tom Shippey (who was involved in the production), explains further:
Amazon has a relatively free hand when it comes to adding something, since, as I said, very few details are known about this time span. The Tolkien Estate will insist that the main shape of the Second Age is not altered. Sauron invades Eriador, is forced back by a Númenorean expedition, is returns to Númenor. There he corrupts the Númenoreans and seduces them to break the ban of the Valar. All this, the course of history, must remain the same.
But you can add new characters and ask a lot of questions, like: What has Sauron done in the meantime? Where was he after Morgoth was defeated? Theoretically, Amazon can answer these questions by inventing the answers, since Tolkien did not describe it. But it must not contradict anything which Tolkien did say. That’s what Amazon has to watch out for. It must be canonical, it is impossible to change the boundaries which Tolkien has created, it is necessary to remain "Tolkienian"...