The Shire, the pastoral and idyllic homeland of the hobbits, is on one level simply Tolkien's idealized portrait of rustic, rural England. On a deeper level, however, it symbolizes the withdrawn life, the insulated life, the too-self-directed life. Bilbo must leave the Shire, not really to go questing after dragon's gold, but in order to grow up-in order to engage the world and to find his place in it. As Gandalf tells him near the novel's end, Bilbo is "only quite a little fellow in a wide world after all"-but that "only" still leaves quite a large role for Bilbo to play, and he must discover that role in the wide world for himself. The Shire represents comfort and tranquility, and while these experiences are not bad in and of themselves, they are also not all that constitutes life. When Bilbo returns to the Shire, he is a more experienced and more knowledgeable person, especially of himself, than he could have been had he stayed in the Shire forever. He has learned to value the world outside; as his own song puts it, "The road goes ever on." There are always more journeys-outer as well as inner-to be taken, even at one's home.
As mentioned earlier, dragons are, in fantasy literature, often metaphors for greed. Readers of The Hobbit may profitably ask, however, who is the real dragon: Smaug, or Thorin, or any of the elves and men who lust after the treasure hoarded beneath the Lonely Mountain? Once Smaug has been killed, the greed over the wealth he leaves behind turns what should be "the happy ending" of this fairy tale into an occasion for war and violence and even betrayal (as Bilbo steals the Arkenstone, even to bring about a good goal). As happens in many stories, a dragon is slain, only to reveal that the slayer himself is a dragon as well. Even Bard desires the treasure, but he manages to overcome that desire, whereas Thorin's desire ultimately leads to his death-just as Smaug died before him.
On the literal level, of course, the forest is the forest. Metaphorically, however, Mirkwood represents the mythic "descent into darkness," through which the hero faces a crisis, or turning point, and achieves greater self-knowledge. It is in Mirkwood that Bilbo kills spiders and begins to feel braver than he did when entering the forest (at which point, significantly, Gandalf his mentor figure departed); it is just after Mirkwood, in the dungeons of the Wood-elf King, that Bilbo, by himself, concocts a plan to rescue the imprisoned dwarves. He has "journeyed to the underworld," as it were, and has, like countless mythic heroes before him, emerged as a new person.
The Hobbit: Metaphor Analysis