The Hobbits :

A mortal race almost certainly related to Men,though their origins are unknown.Their most distinguishing feature was their short stature;even the tallest Hobbits rarely exceeded four feet in height.Originally a widespread people,hobbits were found in much of the north of Middle-earth and down the Vales of Anduin.As the Third Age passed,the Hobbits moved north and west,eventually founding the land of the Shire in III 1601.

Little Folk :

A term for the small race of people more commonly known as Hobbits,especially used by the taller Men (who were in turn referred to as the Big Folk).The origins of the Little Folk are mysterious.They were evidently an ancient branch of the human race but they developed in the mysterious east of Middle-earth and how they came by their small stature and peculiar habits is unknown.By the time they entered history,in the year 1050 of the Third Age,they had already broken into three distinct groups,the Harfoots the Fallohides and the Stoors.Over the next two thousand years,the Little Folk spread slowly across the Western lands.By III 1601,they had acquired a land for themselves, hat they called the Shire.Despite many hardships,the Shire would survive until the time of the War of the Ring and beyond.Though their land did not survive to our own time,Tolkien's words in the Prologue to The Lord of the Ring suggest that the Little Folk themselves are not extinct but continue a secret,hidden existence alongside us,the bumbling Big Folk.
All information is thanks to the Encyclopedia of Arda and the Annals of Arda.
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