Short answers, pulled from the story.
Appendix N is a curated list of 28 authors and 22 specific books that served as the DNA for Dungeons and Dragons. Gary Gygax included this document to show the literary universe that birthed the game. The list specified 12 different book series that created a foundation for modern fantasy roleplaying.
Jack Vance created the Vancian magic system which required players to memorize spells and cast them before they were lost from memory. This system mirrored the magic in Vance's The Dying Earth and included the Thief player class. Vance set a condition that his books must be mentioned in the game, which Gygax honored by placing them in the Appendix.
H. P. Lovecraft and Michael Moorcock faced legal threats over the inclusion of their mythos in the Deities & Demigods reference book. The Tolkien Estate threatened damages to the tune of half a million dollars by Elan Merchandising to remove specific terms from the game. TSR eventually removed Balrog, Dragon, Dwarf, Elf, Ent, Goblin, Orc, and Warg from the game except for Hobbit, Ent, and Balrog.
Margaret St. Clair inspired the concept of dungeons with multiple levels connected by secret doors through her novel Sign of the Labrys. The alignment system of Law vs Chaos derived from the Elric stories of Michael Moorcock and Poul Anderson's Three Hearts and Three Lions. These elements transformed the game into a complex exploration of hidden spaces and dark realms.
Appendix N describes imaginative fantasy and science fiction from the early-to-mid 20th century that predates the global mass media popularity of the genre. Much of the work in the list was originally published as serials in pulp magazines of the 1930s. This era provided the raw material for the game with stories of planetary romance and weird fiction serving as the bedrock for the fantasy that would eventually dominate the world.