The Hobbit, as far as the plot is concerned, is simplistic, which is common in romantic literature. Other romantic literature of this nature would be Beowulf and of course King Arthur and his Knights of the Round Table. Here we see a simplistic meta-narrative of good versus evil. The simplicity captivates toward a clearly defined journey through goblin-filled paths, evil-possessed forests, and finally dragon-filled mountains where we will meet the breather of hellfire, the great Smaug.
The plot orients toward the quest -- to be in the good to overcome the evil. In this tale, our Bilbo is presented with the decision to be for the Good before asking to be an adventurer against the Evil. He must be a problem-solver before he has even decided if he wants to solve problems. He must become the ring-bearer before he even wants a ring.
Romantic literature is attractive because it's aspirational. Bilbo as a hero strikes us because he is a non-hero archetype. Unlike more common heroes like Beowulf (strength-conqueror) or Arthur (king-conqueror), we aspire to be Bilbo because of his heart. It is rightly large even though his stature is not. In Beowulf, we cling to the strongest man of the British Isles and in Arthur, we cling to the greatest leader to walk the hill fields of England.
But Bilbo attracts through is non-heroic heroism. The dwarves are the brave, strong ones. Gandalf is the wise, all-knowing one. Yet, the entire journey's success is dependent upon the heroism of being clever, short, and lucky.
Short always wins.
But perhaps The Hobbit is not so different of a romance. Let's look at Beowulf. This book obviously has good battling evil. Our great and strong hero battles the evil terrorizing monster, Grendel. And Beowulf defeats Grendel, yet the surprise is that the defeat of Grendel's mother happens through a dual sacrifice of his paternal love for his countrymen and her motherly love for her monstrous son.
Sacrificial smallness always wins.