Hobbits were good at hiding, so they'd make good spies. They'd also make good striking-troops. When camped near an enemy army, the hobbits could sneak to the enemy camp and kill some people/ steal goods/ destroy goods/ steal plans/ spy or steal plans/ whatever. (And don't say that Elves would be even better in that than Hobbits or I get depressed. You know, Elves can maybe move silently, but they can't hide because they shine...
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