Smaug certainly looked fast asleep, when Bilbo peeped once more from the entrance. He was just about to step out onto the floor when he caught a sudden thin ray of red from under the drooping lid of Smaug's left eye. He was only pretending to be sleep! He was watching the tunnel entrance!

Whisked from his comfortable hobbit-hole by Gandalf the wizard and a band of dwarves, Bilbo Baggins finds himself caught up in a plot to raid the treasure hoard of Smaug the Magnificent, a large and very dangerous dragon. 

Bilbo Baggins, the heroic hobbit, and the band of Dwarfs are in the heart of Mirwood. They seek the Lonely Mountain, where they hope to reclaim their treasure from the great dragon Smaug!