Gandalf's Powers???

All of the Istari were not allowed to use their full Maiar powers when it came to fighting against Sauron. They were sent to Middle Earth as teachers basically and to unite the races against Sauron and his forces. They were not to use their powers to overpower or give the allied forces a significant advantage against Sauron. Saruman ended up disobeying this rule when he turned against his duties.

Save a horse, ride a cowboy!

I think he believes in saving his energy for the really big challenges like the Balrog and busting his dwarf buddies out of Goblintown.🐭

I got the impression that Tolkein's decision to have Gandalf be essentially one of Middle Earth's demigods was made well after The Hobbit was written. So I think that Tolkein's views of Gandalf's powers and abilities changed significantly over the years.

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I always thought there were many reasons for this.

I think Gandalf uses his powers sparingly because any kind of power is not to be taken lightly. Wisdom and discernment are needed before randomly flaunting power. He is in Middle Earth as a guide and aid to the peoples of Arda, so he isn't supposed to use his powers capriciously. I know, I know, that the fate of all beings stands on the brink here, but the magic Gandalf wields has consequences and he will not use them just to make things easier. I would actually point you towards the TV series Camelot for some of this. It's a series with a lot of flaws, but Merlin expresses some interesting notions about magic. Merlin almost never does use magic in the series and in one episode the viewer sees why: Merlin uses magic and every time he does there are peripheral effects, consequences, which are dire and irreversible. I believe Tolkien thought of magic in the same way: to be used sparingly and prudently.

Gandalf was not permitted (by Illuvatar/ God), I believe for the above reason, to just go throwing his full might around willy-nilly.

Furthermore, the impression I get is that these things are debilitating (in the books, his magic is used with exertion). If he summons up a huge fireball and chucks it into the first group of orcs he sees, yeah, he'll wipe out those orcs, but he'll be too used-up to be of further use. Then a bunch of trolls show up and everybody's screwed.

This ties into the above point, too: if he starts throwing fire and magic around, maybe others around him will start thinking, "Neat! Gandalf's got this. I'm going to let my guard down, even for a second..." and next thing you know, you're overrun because everybody expected Gandalf to pick up the slack and then he's practically alone out there.

At the end of the day, it might seem odd that Gandalf doesn't just obliterate their enemies with a flick of his staff, yet I think there are reasons if you read between the lines.

Finally, for whatever reasons (given or in the subtext) I like that Gandalf doesn't just throw spells around. It makes the action more intense, the powers more special, and the world feel more rich for its omissions. I felt the opposite way about The Force in the Star Wars prequels. They used it so much and so often it stopped being special - even though the only thing preventing them from doing it in the original Star Wars films was a lack of money or a lack of technology to make them flip around and shoot lasers out of their eyes or whatever. When power is only used some times it makes the times it is used more meaningful.

Thinking about Fellowship of the Ring only here: consider the fights in Moria. If Gandalf had just melted the cave troll, how special would his using magic to fight the Balrog be?

We don't really know, but he's part of the 3rd "race" power-wise in this universe, he's a Maiar (so were the Balrog and Sauron), which is only below the Ainur (well Maiar are lesser Ainur...) and Eru Illuvatar itself (the God of that universe).
He's supposed to be the strongest Istari, even if he yields to Saruman for head of the council.
So he's quite strong! (Most likely less than Sauron at full power, but still...).
Plus he also possesses the 3rd elf ring, but I don't remember if he ever used it.

His path is just not as a warrior but as a teacher/protector.