What effect does the dwarves' song in Chapter 1 have on the plot of The Hobbit? It creates exposition that provides background information about the dwarves' mission. It is a turning pont in the story when Bilbo realizes he has no choice but to help the dwarves on their mission. It creates a complicating incident by describing the generations-old feud between the dwarves and Bilbo's ancestors. It sets up the rising action as the song describes the dangers ahead and pulls Bilbo into the mission.