The Hobbit takes cues from narrative models of children's literature, as shown by its omniscient narrator and characters that young children can relate to, such as the small, food-obsessed, and morally ambiguous Bilbo. The text emphasizes the relationship between time and narrative progress and it openly distinguishes "safe" from "dangerous" in its geography. Both are key elements of works intended for children, as is the "home-away-home" (or there and back again) plot structure typical of the Bildungsroman. While Tolkien later claimed to dislike the aspect of the narrative voice addressing the reader directly, the narrative voice contributes significantly to the success of the novel. Emer O'Sullivan, in her Comparative Children's Literature, notes The Hobbit as one of a handful of children's books that has been accepted into mainstream literature, alongside Jostein Gaarder's Sophie's World (1991) and J. K. Rowling's Harry Potter series (1997–2007).
Tolkien intended The Hobbit as a "fairy-story" and wrote it in a tone suited to addressing children although he said later that the book was not specifically written for children but had rather been created out of his interest in mythology and legend. Many of the initial reviews refer to the work as a fairy story. However, according to Jack Zipes writing in "The Oxford Companion to Fairy Tales", Bilbo is an atypical character for a fairy tale. The work is much longer than Tolkien's ideal proposed in his essay On Fairy-Stories. Many fairy tale motifs, such as the repetition of similar events seen in the dwarves' arrival at Bilbo's and Beorn's homes, and folklore themes, such as trolls turning to stone, are to be found in the story.
The book is popularly called (and often marketed as) a fantasy novel, but like Peter Pan and Wendy by J. M. Barrie and The Princess and the Goblin by George MacDonald, both of which influenced Tolkien and contain fantasy elements, it is primarily identified as being children's literature. The two genres are not mutually exclusive, so some definitions of high fantasy include works for children by authors such as L. Frank Baum and Lloyd Alexander alongside the works of Gene Wolfe and Jonathan Swift, which are more often considered adult literature. The Hobbit has been called "the most popular of all twentieth-century fantasies written for children." Chance, however, considers the book to be a children's novel only in the sense that it appeals to the child in an adult reader. Sullivan credits the first publication of The Hobbit as an important step in the development of high fantasy, and further credits the 1960s paperback debuts of The Hobbit and The Lord of the Rings as essential to the creation of a mass market for fiction of this kind as well as the fantasy genre's current status.