[Morwen]

If we can accept that hobbits were around long before the mid-third Age, we have to sk why they weren't noticed. Tolkien gives one brief answer: it's merely a matter of historical recordkeeping, or lack of it:

Quote:
The beginning of Hobbits lies far back in the Elder Days that are now lost and forgotten. Only Elves still preserved any records of that vanished time, and their traditions are concerned almost entirely with their own history, in which Men appear seldom and Hobbits are not mentioned at all. Yet it is clear that Hobbits had, in fact, lived quietly in Middle-earthfor many long years before other folkbecame even aware of them. And the world being full of strange creatures beyond count, these little people seemed of very little importance.

One reason that hobbits may not have much of a presence in the recorded history of Elves or the oral history of other peoples is that, for others, they apparently never did anything worth mentioning. Theoden says as much to Merry when they first meet.

Merry bowed....."I have wandered in many lands, since I left my home, and never till now have I found people that knew any story concerning hobbits.

"My people came out of the North long ago," said Theoden. "But I will not deceive you: we know no tales about hobbits. All that is said among us is that far away, over many hills and rivers, live the halfling folk that dwell in holes in sand-dunes. But there are no legends of their deeds, for it is said that they do little, and avoid the sight of men, being able to vanish in a twinkling...."

TT, The Road to Isengard

Haldir of the Galadhrim has also heard of hobbits. However, his people have not heard of them "for many a long year, and did not know that any yet dwelt in Middle Earth" (FotR, Lothlorien)

So hobbits, for others in Middle Earth who might once have known about them, have dropped out of existence and even while they were still to be observed they were not doing anything worth remembering or writing about.

But what I would like to know is why hobbits don't appear to have any information/legends/tales about their own origins. Merry at one point, in response to a remark from Treebeard, observes that they never seem to be mentioned in any of the old tales. This would have been a good place for him to say what old tales Hobbits have about themselves and their origins, but he doesn't do so.