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yeah, while Scotland, the Malvorn Hills and parts of Northern Ireland would get you a more "authentic looking" Middle Earth, NZ had a whole infrastructure to do Middle-earth (or, as we have seen, generic fantasy) with.
However, beyond all that, this is a megaproduction and megaproductions do what can only be described as location shopping. They know the production will offer headline positives for the host country (jobs, tourism spinoffs, experience for film crews), so they demand goodies. The Hobbit productions demanded, for example, suspension of union rules (so they could pay people less, demand more hours and probably cruddier conditions. No doubt the Amazon deal demanded (and got) more sweeteners, then they came back for more for season 2.
The UK, interested in poaching productions from Ireland and Hungary (post Brexit), probably offered better tax credits, less "red tape" even deeper suspension of production union rules and standards.
It will still be a net benefit for the UK economy and UK media production, but probably less than you'd think.
(Having been around the film industry: there's a reason these "red tape" rules exist. Sets can be dangerous. Hours can be long. Fatigue is a thing. It's all very much a real job, only with crappier hours and rubbish payroll. As a director friend says: "you type in EXT: NIGHT on your script, because, in your head, the scene needs it to be outside at night with action happening. Then you find yourself, six months later, standing in a field, at night, in the cold, in the rain losing feeling in your fingers")
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Dreaming of getting back to painting...any month now.
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