Thorin prevails upon Bilbo to enter the Mountain. Bilbo slips on his ring and descends through the tunnel. He feels the heat of Smaug the dragon and hears its snoring and, in a moment of great bravery, he determines to go on despite his fear. He then comes upon the dragon alone, asleep on a pile of unimaginable treasure — gold, gems, weapons, and vessels. Bilbo seizes one cup and flees to the outside where the dwarves greet him.
Smaug awakes and discovers that a cup has been taken. Outraged, he bursts forth from the mountain and perches on top of it. Bilbo and the dwarves run back inside the mountain; Bombur and Bofur must be hauled up by rope from the valley below. Smaug hunts for the thief outside on the mountain, but eventually comes back to his lair to sleep. The dwarves turn to Bilbo for leadership. He decides to go back down to Smaug and see if he can find his weak spot. Bilbo is invisible because he is wearing his ring, but Smaug can smell him. They talk about the treasure-trove and the dwarves' intent to reclaim it. All the while, Bilbo is looking for Smaug's weak spot, which he finally spies near his left breast.
Finally, Bilbo emerges from the mountain, weakened from his experience. He is annoyed by a thrush nearby. Bilbo and the dwarves discuss Smaug; Bilbo is fearful that Smaug will attack Lake-town. He urges the dwarves to move to the safety of the tunnel. There they praise Bilbo's bravery and tell tales about the treasure, describing some of the legendary items including the Arkenstone of Thrain, a large white jewel. Just in time, the dwarves shut the secret door, preventing Smaug from entering. Enraged, the dragon smashes the door and heads toward Lake-town.
In this chapter, Bilbo undertakes the traditional task of the hero — killing the dragon. His adventures so far have prepared him for this task: He has grown in judgment, resourcefulness, and bravery; additionally, he has the ring with the magical power of invisibility. It is in recognition of his suitability for the task that Thorin sends him to investigate the dragon. And it is inside the mountain that Bilbo experiences his moment of greatest bravery, when he decides to continue on in search of the dragon despite his fear. This decision is described as being central to Bilbo's character and significant in that it is a moment alone, with his own conscience.
Bilbo does confront Smaug the dragon and, like his encounter with Gollum, he matches wits with him in conversation. During the conversation, however, he looks for the vulnerable spot on Smaug's body. Bilbo knows Smaug must be killed and, rather than avoiding it, Bilbo develops a strategy for accomplishing it. In bringing back the cup from Smaug's lair, Bilbo demonstrates to others that he has indeed been in the place of danger and has brought back a trophy to prove it. This is an act that is typical of the questing hero of legends and fairy tales.
The stories about the treasure that the dwarves tell mention the Arkenstone for the first time. It is a sacred object for the dwarves, almost like the holy grail of Arthurian legend.
staggerment amazement, confusion.