To appreciate The Silmarillion, you have to read it multiple times. The first time through, you won’t even come close to getting your head around it. Don’t even try. It’s just too dense. If you’re finding yourself intrigued, but having trouble getting back in for another read, I have a number of recommendations for getting a grip on all the little things that make the “Sil” such a compelling read.
First, skip the Ainulindalë. I know this borders on blasphemy to some, but while it is a remarkable creation myth fitting to the grandest work of fantasy fiction in history, it does very little to advance the story. You can get a pretty good idea who the players are by simply starting with the Valaquenta. I’m not saying to ignore Ainulindalë completely. I’m merely suggesting you don’t feel obliged to read every word, every time.
Second, don’t read in a vacuum. Read the Wikipedia pages for pretty much any of the main characters, locations, battles, and events that you find intriguing. This was how I first began to love The Sil, by reading about it as much as or more than I read the actual book. It will help you come to know the major players, what they do, why they do it, and what happens because of it. The reality is, The Silmarillion paints with broad strokes. Tolkien covered thousands of years of fictional history in a book a third the size of LoTR, so it’s necessarily dense. The support material does two things. It compiles the stories of individual characters into linear narratives which are easier to digest, and it fills in many of the gaps with background information which may be hard to find in the actual text. This will help you first begin to differentiate the many characters (many of whom have very similar sounding names), then ultimately to understand them in a deeper sense.
I also kept this map handy while I was reading.
Third, and I think this is the most important suggestion, don’t feel like you have to read it all at one time like you would a normal book. This relates to my first recommendation, though in this case, I don’t recommend you skip anything. Just take it in bite-sized chunks. The good news is, Tolkien helps you do this. The Silmarillion is a collection of tales, and it can be taken as that, a compilation of related independent stories. By looking at them as short stories rather than as chapters in a novel, they lose none of their density, but gain a bit of approachability. How do you eat an elephant? One bite at at time (though I do not condone the eating of elephants). Use the same method with The Sil.
Finally, never believe that you can retain it all. And don’t assume that you have to. I’m slightly embarrassed to say that I have a copy of The Sil that spends most of its time on my bedside table, in case I come up with some crazy question that I need to settle in the middle of the night. Again, it’s too dense to absorb completely, so don’t torture yourself into believing you have to. The best most of us can do is try to retain the basics, enjoy the stories, reflect on the ideas, and marvel at the complexity of the finest of Tolkien’s works.