(What follows is the second post in a series of eleven posts exploring the greatest mystery in Tolkien's Lord of the Rings: Who or what is Tom Bombadil? The major theories will be explored and a new theory will be suggested.)
Introduction: Setting the Stage of How to Approach Bombadil
Tom Bombadil is a merry fellow but beneath his amusing character and actions lie a deep and passionately debated issue. Who is he? What is he? Tom Bombadil is perhaps the biggest mystery in all of Tolkien's world. The question which Frodo asks in Tom's house "Who is Tom Bombadil?" is one that has elicited many responses from the Tolkien faithful. There are the outlandish theories such as Tom is really the Witch King of Angmar to the more faithful theories such as Tom is really Illuvatar, which Tolkien himself firmly rejected.
Any sound theory of who or what Tom Bombadil truly is must be able to account for at least three major questions/facts of Tom's character as found in Lord of the Rings. The first of which is his unique power and its limitations. Tom has power over the Forest and Barrow-wights and yet his power seems to also be limited to his current location. What kind of creature can exercise power over both the forest and demons? The Second fact any legitimate theory must wrestle with is Tom's relationship to the Ring. The Ring has no power over him, yet we are told Tom would not see the need to protect the Ring if asked to do so. This is indeed a very strange contradiction. The third truth of Tom that must be accounted for is him being referred to as eldest and as being existent before the Dark Lord entered. His age and being referred to as "fatherless" is a crucial hint to what Tom is. There are many facts within each of these three areas which must be carefully weighed when considering the validity of any theory of who/what Tom Bombadil is.
There are three major theories within Tolkien fandom which bear serious consideration when they answer "Who is Tom Bombadil?" The first theory is that Tom is one of the Valar. This theory has gained wide support in recent years and most people who hold to this theory would assert that Tom is Aule and Goldberry is Yavanna. The second major theory is that Tom is one of the Maiar much in the same way that Gandalf, Saruman, Sauron and Balrogs are. The third theory is that Tom is a nature spirit. This theory holds either that Tom is the Spirit of the forest or that he is the Spirit of Middle Earth (Arda). I will argue that each of the three major theories has irreconcilable flaws to at least one of the three facts above and therefore each of these theories must be firmly rejected. In addition to the three major questions listed above I will demonstrate through Tolkien's writings, his letters, and Tom Bombadil himself that a fourth option better explains all the known data. With that in mind we will begin by examining the three major theories concerning Tom Bombadil and demonstrate how they cannot adequately answer the above questions.
First a look at the Valar Theory
 “There is no embodiment of the One of God, who indeed remains remote, outside the World, and only directly accessible to the Valar or Rulers.”- The Letters of J.R.R. Tolkien No 181, dated 1956.
 Tolkien describes the barrow-wights as evil spirits who embodied dead corpses ie demons: (FOTR, In the House of Tom Bombadil, 181) and (ROTK, Appendix A, The North Kingdom and the Dunedain, 1041).