Hobbit
The word hobbit sprang without warning into Tolkien’s mind while he was grading exams. He simply found himself writing on the back of an exam page, “In a hole in the ground there lived a hobbit”. He didn’t know what a hobbit was, or what kind of hole it lived in… But he found the answers as he was weaving bedtime stories for his children — the stories that would, of course, be written down as The Hobbit.
Why did it come into Tolkien’s head? One possible source is the word rabbit. Tolkien vehemently denied that hobbits had anything to do with rabbits, although Bilbo Baggins is called a “rabbit” multiple times in the book. Many years after The Hobbit was written, Tolkien developed a fictional etymology for it: hobbit was a worn-down form of Old English hol-bytla, “hole-builder”. Perhaps Tolkien, a scholar of Old English, subconsciously had this in mind from the beginning. Another possible source is a mention of hobbits in long list of earth-spirits compiled by a 19th-century writer, a list which Tolkien may possibly have read and then forgotten about. In any case, other possibilities are (1) a word hobbe in Middle English which meant something like “small sprite” or “changeling”, and which Tolkien was probably aware of on some level, and (2) Hob, a nickname for Robin Goodfellow, a forest spirit.
It seems almost as if the syllable hob has always been there, floating around in the collective unconscious of English speakers, and has emerged at various times and places under the pen of various authors who happened to “hear” it.
Phonosemantically, hobbits are destined for the earth-shaking role they play in the story of Middle-Earth. The “h” at the beginning is the home, the hearth, love of which is in the heart of every hobbit. The short “o” signifies their character, which is not only steadfast but deeply connected to the Source, as is shown by their resistance to external influence and magic of all sorts. But the primary syllable ends with the “b” of breakouts, sudden emergence, and surprise — and a recurring theme in Tolkien’s work is how surprising hobbits are to other races in Middle Earth, despite (or perhaps because of) their simple earthiness. The final “it” is a light, tense movement along a path; so overall the name suggests energy that has its roots deep in home and hearth, but has burst out and set to wandering.
