Right before this paragraph in "Of the Beginning of Days," which describes Iluvatar’s unusual gift of death and free will beyond the Music of the Ainur to the Children of Men, we are told that the Elves often associate Men with Melkor and think of mortals as being closest to Melkor in Manwe’s mind. It’s a bit telling that the narrator does not confirm this suspicion of the Elves, and it’s easy to see why.
Ironically, Melkor’s situation seems to have much more in common with the Elves than with Men. The Valar and the Elves are bound to Arda for as long as time lasts within it and are unable to leave or deviate from the Music that governs it. They are trapped within the “Little Kingdom,” as the Ainur call it. However, Men’s ultimate destiny lies beyond Arda, perhaps in the “far heaven” in which the Ainur who are not governing Arda dwell.
Regardless, their fate is separate and offers a freedom that the Valar and the Elves do not share - they are bound to their fates while Men seem to be able to forge their own destiny and legacy, for good or ill. Tolkien’s narrator tells us that this freedom that death affords is envied even by the “Powers” themselves, as they are worn by the march of Time. Perhaps this mysterious freedom is why Melkor fears Men so much, and why he hates them - they can freely leave the small world he has bound himself to in his hatred and greed.