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In The Fellowship of the Ring, legend plays an extremely important role. The hobbits really have never traveled outside of the Shire for them, so traveling through Middle Earth is a bit of a shock to them. As some of the more veteran, older travelers in the group, like Gandalf, Legolas, or Aragorn, tell the Hobbits legends of the lands in which they travel, their story-telling helps to give the hobbits an appreciation for the cultures and the possible dangers they may encounter.
Hearing the old legends also helped take the travelers' minds off of their current woes. A prime example of this is when Aragorn sings the Lay of Luthien to the hobbits in the chapter "The Knife in the Dark." All four of hobbits were weary and frightened, and Aragorn chooses the tale of Tinuviel, because "it is a fair tale, though it is sad, as are all the tales of Middle-earth, and yet it may lift up your hearts" (187).
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