J.R.R. Tolkien connected the word “hobbit” with the Old English form holbytla.
In an author’s note to The Lord of the Rings, Tolkien explained that the modern word hobbit represented a form derived from the Old English word holbytla. He associated that form with the idea of a “hole-dweller,” fitting the underground homes and domestic habits of Bilbo Baggins and his people.
Tolkien’s explanation is part of the fictional linguistic history he constructed for Middle-earth. The word is presented as a translation into modern English of a term used in the internal history of the setting, rather than simply as an ordinary modern English invention.
Readers sometimes connect hobbit only with the word “rabbit” or with modern folklore about small creatures. Tolkien did draw on older folklore and language, but holbytla is the specific Old English form he cited. The term is therefore a philological clue as well as the name of a fictional people.