Well, they recently unearthed skeletons of "hobbit-sized" people on an island somewhere in the far Pacific.
Perhaps Tolkien's tale was not based entirely on fable.
Myths many times are derived from ancient fact.

While much of the story of the Tuatha de Danann has been distorted over time, there is growing evidence that the story is based on fact. Remains from some of the battlefields have been found which cast a different light on the story as a whole. No longer are the Tuatha considered just Irish legend and fairies.