Avatar lost because, while it's visual effects are amazing, the story just isn't good enough relative to the Hurt Locker (politics aside). People are blown away by the 3D effects and a cliche story.
While I can't speak for Lord of the Rings, the other pictures had original, well-written captivating stories. OK, Crash wasn't all that great, I admit. It's hard to compare different years, though. Comparisons only work for the one year.
As for Sean Penn, while he won best actor partially because Hollywood feels the need (and thankfully) to push liberal social justice in America, it was one hell of a fucking performance. It was just amazing acting.