In this pivotal chapter, Bilbo Baggins finds himself at the threshold of the Lonely Mountain, having journeyed far with Thorin and the dwarves. With the objective of reclaiming their treasure from Smaug, the dragon, Bilbo's role as the burglar becomes crucial. As the group reaches the mountain, they face the daunting task of locating the secret entrance that leads into Smaug's lair.

After several attempts to find the hidden door, it is Bilbo's sharp wit and the knowledge gained from their earlier travels that lead them to the correct location. The door reveals itself at sunset, hinting at the magic that surrounds it. With the door opened, Bilbo bravely enters the dark, ominous cave, filled with the scent of treasure and danger.

Inside Smaug’s lair, Bilbo is overwhelmed by the sight of the vast hoard of gold and jewels. The treasure gleams with the promise of wealth, but it is also a reminder of the dragon's curse. As Bilbo cautiously moves through the treasure, he is filled with both excitement and fear. He spots a golden cup, a symbol of the riches that once belonged to the dwarves, and in a moment of reckless confidence, he decides to take it.

Bilbo successfully steals the cup, but this act awakens Smaug from his slumber. The dragon, furious at the intrusion, begins to search for the thief. Bilbo, realizing the danger he is in, engages in a tense conversation with Smaug, cleverly using riddles and flattery to keep the dragon distracted. Through their exchange, Bilbo learns of Smaug's vulnerability—a bare patch on his underbelly where the scales are missing. This vital piece of information is significant, as it could provide the key to defeating the dragon later on.

As Smaug becomes increasingly agitated, Bilbo makes a hasty retreat, escaping the lair with the stolen cup. He exits the cave and rejoins the dwarves, who are anxiously awaiting his return. Bilbo's bravery and cunning in the face of overwhelming odds mark a significant turning point in his character development. The chapter highlights Bilbo's growth from a simple hobbit into a resourceful adventurer, setting the stage for the challenges to come as the group prepares for their confrontation with Smaug. This encounter not only cements Bilbo's role within the company but also foreshadows the impending conflict that will arise from Smaug's wrath.