There are many Valar references in the Rings of Power, because these almighty god-like beings were crucial in the creation of Middle Earth, and the lives of all the people who dwelled there. The Valar were Eru Illuvatars earliest creations, and among them was Morgoth, the villain who went against the pure designs of the creator and decided to forge his own path of greed and suffering.
Morgoth envied the Children of Illuvatar, the elves and men, for all that they had been given, and so he joined forces with the maiar Sauron in order to lay waste to their lands. But despite the power of the Valar and the maiar being the most substantial forces to be reckoned with throughout all of the ages, there was one among the elves who Melkor feared: Feanor.
Feanor is portrayed in the Rings of Power as the master creator, the elven smith who was able to forge the most breathtaking designs of the universe, unrivaled by any who lived after him. It was he who was responsible for creating the Palantir which several great leaders would later be corrupted by, as well as the Silmarils, the most treasured jewels of the elven race which held all the allure of the trees of Valinor within them.
It is these jewels that Celebrimbor explains in episode 2 of the Rings of Power series that Morgoth “found so beautiful that after he’d stolen them, for weeks, he could do nothing but stare into their depths.” Feanor’s works “almost turned the heart of the great foe himself,” and it is thought that when he was finally able to tear himself away from them after seeing his own hideous form reflected back at himself within them, he felt pain ever after. This is just one of the many reasons that a powerful being like Morgoth could fear an unceasing immortal like Feanor.
Although it is never told exactly what the Silmarils are made of, it is known that they were a delight that ensnared all who beheld them, but they were also a dangerous thing to covet, and would cause many terrible battles and deaths. When they were stolen by the enemy, and later scattered, they caused several brutal conflicts that lead up to the War of Wrath, the battle that only Galadriel appears to have survived as she piles helmets thousands high in the introductory scenes of the show.
During this time, Feanor became a source for Melkor to fear, because the elf was so intent on finding the precious gems that he was willing to risk life and limb for them, and was subsequently able to stave off armies of orcs hundreds of thousands strong that Melkor created and tasked with defeating the elves and men. Up to this point, Melkor had remained in his ethereal state, more of an essence than a flesh and blood being, like Sauron is for most of the Lord of the Rings movies, hence the challenges in depicting Sauron in physical form during the Amazon series.
But Melkor decided to join the fray after Feanor’s ruthless defense against his forces, and although Melkor was a maiar, he sustained an injury that shook him to the core, from Feanor’s brother Fingolfin no less. This was the first time that Morgoth had ever fully realized his own infallibility, and it taught him to be fearful of the wrath of the elves. This also linked to a warning that he had heard in his heart long ago, when the Valar first raised their voices in song, and he chose to deviate from the music of Illuvatar’s creation. Then, he had known that he would one day face his comeuppance for betraying the one who made him, and that his punishment would come from the elves and men of Middle Earth. Thus he feared the wrath of Eru, and the banishment that it would bring, and believed that Feanor may be the key to his undoing.
He was eventually brought down, leaving Sauron to finish what he started, and at that point he was thrown into the void beyond Mandos, never to be able to interact with the physical world again. Every evil villain has their Achilles heel, the blind spot to their seemingly impervious plans. For Saruman the white, it was revealing his plan to Gandalf too early in a bid to manipulate the grey wizard into joining him. For Sauron it was not being able to fathom or anticipate that anyone could possibly want to destroy his ultimate weapon in the fires of Mount Doom, at which point he regretted forging the one ring, and for Melkor, it was believing that he was above the other creations of the world, which led him to grossly underestimate the forces of elves and men who have something worth fighting for.