Tolkien found the conversation of Hobbits one of the surprising joys of writing LOTR. That writing did not come naturally to him, but he enjoyed listening in on them as much as his readers do. His natural tendency was to grand and formal speech, which we see especially in The Silmarillion. Less than half of LOTR fans liked TS, and the lack of hobbits was the most frequent complaint.
Even in LOTR, nearly all non-hobbit characters speak in formal style, enough so that it is easy to parody. Just this week I realised I would find the book barely tolerable without hobbit-talk. In the original Hobbit the dialogue is a touch stilted in another direction, toward the childlike and overly-playful. The dwarves, or even Gandalf, are the more reliable link between the serious and the comic at first, though over the course of the book Bilbo rather grows into his own and stands in both worlds. Older words and elements – runes, wars long past, dangerous monsters and archaic names – are only gradually introduced into the story, as Bilbo moves out of his predictable and normal world into the frightening world without. Yes, normal, even in a fantasy context. The Shire, for all its invention, is more like our own world than all beast-fables and most realistic fiction.
Tolkien may have been most devoted to the remote landscapes and sweeps of history of the LOTR appendices and The Silmarillion, but for the reader, these are the background, the canvas on which the hobbit-story is written. Hobbits never say “Lo,” never say let us gird ourselves and weep no more, or It is long indeed since we saw one of Durin's folk in Caras Galadhon. By the very end, Frodo might be able to say, like Gandalf, It is not our part to master all the tides of the world, Sam, but even then, it would be a stretch. None of the other hobbits come near it.
Hobbit-talk is the center of the story. The great events of an invented world, however edifying, matter little to us – at least as far as the pull of the narrative. It is that these poor rustics are caught up in the great events – persons less dignified and heroic than ourselves. What is happening to hobbits, and listening in on their encounter with the enormities of war, monsters terrible to even think about, succession of kings, and grudges of a thousand years are all we care about. The lone exception is the section devoted to Aragorn, Legolas, and Gimli, first in their pursuit of the hobbits, then in the wars of the age. Yet it is in this section that Gimli’s speech changes a bit, becomes less formal. He becomes the necessary hobbit for those scenes. Not coincidentally, these are the most memorable and beloved episodes about any dwarf in the books.
Span of years roughly correlates with this grand archaism. This makes an intuitve story-sense, that those who live longest speak most toward eternity, with High Elves being most formal of all.