This is in a sense the main chapter of the book, the one to which everything up to now has tended, the death of Smaug.
Rateliff tells on page 496 that originally Tolkien had planned that Smaug was unable to overcome the Lakemen and returned to his lair to rest and recuperate:
Bilbo puts on ring and creeps into dungeon. and hides. Dragon comes back at last and sleeps exhausted by battle.
Bilbo [takes >] plunges his little magic knife and it disappears. he cannot wield the swords or spears.
Throes of dragon. Smashes wall and entrance to tunnel. Bilbo floats <away> in a golden bowl on D’s blood, till it comes to rest in a deep dark hole. When it is cool he wades out, and becomes hard & brave.
Why Tolkien made this major change is not known. One can speculate that Tolkien felt that such a role for Bilbo was too much and that bringing in a different slayer helped credibility.
In Tolkien’s earlier drafts there are a number of bridges connecting Laketown to the mainland. Tolkien mostly changes this to only a single bridge, but forgets and has “bridges” when he writes (emphasis mine):
Amid shrieks and wailing and the shouts of men he came over them, swept towards the bridges and was foiled!
The idea of destroying the bridge is to make Laketown into an island, protected by the water around it. That indeed is somewhat troublesome. If Smaug could have used a bridge to get onto Laketown despite archers and pails of water it appears that Smaug might have simply landed on one of the buildings in the town instead. But Smaug does not try this. Instead Smaug swoops onto the town again and again, quickly breathing flames, attempting to set the town on fire. When Smaug withdraws from their bows temporarily, men quickly put the fires out.
In the published version, in which right up to the end Smaug appears to be winning, this strategy appears well thought out.
Bard is introduced with careful casualness, seeming to be merely an example of a less credulous lakeman. But then Bard is introduced again as the captain of a company of archers still holding out against Smaug while most (understandably) flee by swimming or in boats. Tolkien now tells us that Bard is a descendant of Girion Lord of Dale. The perceptive reader immediately sees that Bard is being set up as the dragon slayer.
But couldn’t anyone have fired that shot? No. Tolkien sets it up with a couple of previous statements that now come together. Thorin had previously mentioned that the thrush who had cracked the snail may be one, perhaps the last one, of a breed of magical birds and mentions, among other bits of lore, that the “Men of Dale used to have the trick of understanding their language.” Tolkien stresses that this particular thrush appears to be listening when Bilbo is relating the details of his conversation with Smaug, including Smaug’s unintentional revelation about the bare patch in Smaug’s diamond waistcoat and has Balin repeat that particular piece of information again.
Back to Bard who is surprised in the midst of battle when an old thrush perches on him by his ear. “Marvelling he found that he could understand its tongue,
for he was of the race of Dale.”
Tolkien does not here or anywhere get into how many others of “the race of Dale” might be now living in Laketown or how the thrush recognized that the
understanding magical thrush talk gene was dominant in Bard. The thrush blurts out the information about the gap in the hollow of Smaug’s left breast. Then “it told him of tidings up in the Mountain and of all that it had heard.″ That is a considerable bit of information.
When the talkative thrush at last shuts up, Bard prays to an hereditary black arrow which has never failed him, and so armed with folktale motifs, shoots Smaug. Amazingly the bald patch in Smaug’s armoured waistcoat just happens to be right over Smaug’s heart, by chance as it seems, although in Tolkien’s Middle-earth it has probably all been predestined by Eru. Smaug drops dead immediately from the shot and his body falls onto Laketown, destroying the town and apparently Bard in the draft text. But Tolkien seeing more use for Bard as a
Return of the King figure brings Bard back almost immediately.
In folktales and legends dragons are killed by a sword or by the traditional weapon of some god, wielded by a single champion. Considering how unlikely a shot through the heart would be against a bear or a boar this is reasonable enough (though not only a
single champion).
As to Smaug, Tolkien writes of the place where his body lay in the lake:
But few dared to cross the cursed spot, and none dared to dive into the shivering water of recover the precious stones that fell from his rotting carcass.
Personally that seems to me to be unlikely, possibly a flourish from Bilbo’s diary. Although fear of a zombi Smaug is interesting.