While TH can be read as a children's book
or adult's there are some arguments for
it as a children's book.
1.)JRRT actually created it as one of the stories
he told his children (like Roverandom).
2.)t works very well as a read aloud book to children
(I did so to a fourth grade class with various students
taking parts (I got to be the narrator- and Gandalf,after all, I had to buy multiple copies for the class to read) . Btw, three boys got to be
bad guys and were repeatedly killed (trolls, spiders,
goblins, etc.). There were some great death scenes.
3.)And, as noted above, it was originally not in
the legendarium (hence the more comic dwarves).