I will help you with your question by providing a few examples that illustrate the purpose of the songs. In Chapter 1, “An Unexpected Party,” we come across two songs sung by Bilbo’s surprise guests, the dwarves. The first is a comical, impromptu work song that the dwarves make up...
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as they clear and wash dishes (“Chip the glasses and break the plates”). This song not only entertains the reader, but also reveals a lighter side to the gruff temperament of these characters.
The second song in this chapter (“Far over the misty mountains cold”), also sung by the dwarves, is an old, haunting ballad that provides historical background for the quest to which Bilbo has been invited. It works as a kind of literary device that moves the plot onward. It reveals, both to Bilbo and the reader, the reason for the quest and has a kind of enchanting effect on Bilbo. It fires up his imagination and convinces him to join the unexpected guests on their adventure.
In Chapter 3, “A Short Rest,” we come across another impromptu "burst of song, like laughter in the trees” that pokes gentle fun at the arriving guests: Bilbo and his company of dwarves. This time, the singers are the elves of Rivendell. The “fair nonsense” of their song amuses the reader and introduces the light-hearted, whimsical aspect of their culture.