After the comforts of Lake Town, Thorin's party turn north for the last part of their journey and receive, very quickly, a large dose of reality. They meet a party with horses and provisions at the north end of the lake who quickly leave them with the words that it was "...easier to believe in the Dragon and less easy to believe in Thorin in these wild parts" putting an end to the puffed up pride that Thorin used to bolster his courage in Lake Town. The Lonely Mountain "grim and tall" grows ever nearer. The land is pathless and desolate - indeed it is "The Desolation of the Dragon" and their spirits plunge. Even though there is no sign of the Dragon himself, they are now in his territory with everything that that entails and the realisation of the true magnitude of their quest starts to hit home. Only Thorin and Balin have any idea what lies ahead, being survivors of Smaug's attack. In fact it is only at this point in the story that we discover that Balin was also there, alongside Thorin. What memories and depressing thoughts must have been aroused by the sight of the ruination of a once 'green and fair' land.

It is here that Tolkien shows us that there is more to a Dragon than the immediate possibility of becoming at worst, charcoaled and, at best, rather singed. In Tolkien they are great destroyers of entire landscapes, creating a wilderness that nothing can live in. In fact all of Tolkien's 'monsters' are destroyers of the natural environment, not just people: Morgoth, Sauron, Saruman, Orcs, they all create a lifeless wilderness for themselves by their very nature - they are destroyers of natural creation (i.e. anything not created by themselves). So there is more to the task ahead than just regaining the Lonely Mountain, there is a whole land to heal if there is ever to be food and trade. And it's very quickly apparent that Thorin's folk weren't the only ones to suffer. The ruins of Dale, which Balin, Fili, Kili and Bilbo see when they are sent scouting for the hidden door, are a reminder that once the Dragon is gone there are other disposed peoples with their own claims to the Desolation of the Dragon.

And as for the Dragon himself, there is even more discomfort when the scouting party see smoke issuing through the cavernous entrance to the Mountain. Bilbo takes it as a sign that the dragon is home (something to lose sleep over in itself) but Balin points out that the foul reek would still issue from it even if the dragon were away, or possibly "lying out on the mountainside keeping watch". A Dragon in a hole is better than a Dragon keeping watch, by anyone's reckoning. The dwarves are now completely dispirited but, astonishingly, Bilbo is energised by the whole thing and starts pondering the map and moon-letters in search of clues to the hidden door.