This is definitely a classic. I think it was my first real fantasy book when I was a child, but I had not read it again since then, while I have read Lord of the Rings multiple times. It's definitely written for a much younger audience, but very entertaining.

What surprised me is how many hints of the bigger Tolkien world are already in there. As I read the Silmarillion just recently, I was pleased to find that Glamdring and Orcrist are swords from Gondolin. Also, several hints at Moria and such. I really enjoyed those parts the most, to find out how the Hobbit fits into the larger picture.

I highly recommend reading this book first before you move on to Lord of the Rings, it will make it more enjoyable.