by Davide Mantovani, Marco Porcaro, Simone Villa
The Forced Perspective is a technique that uses optical illusion to make an object appear farther away, closer, larger or smaller than it actually is in reality: human perception is manipulated and deceived by the use of distances and scale ratios. It is mainly used in photography, film and architecture.
To make an actor look like a Hobbit of normal height, there are several options: you could use stunt doubles very low or very high, or computer graphics and sound stages. The last option, perhaps the one that gives the scene a more realistic look, is the Forced Perspective.
Front Effects - VFX curiosities and Making of 