The "miniature" humans on the island of Flores in Indonesia have had extensive tests performed on them. Their remains have been examined in detail. While their brain was as small as an orange it was large enough for them to develop many skills. At a third of the weight of modern-day people it was in proportion.
The world of the "Hobbit", Homo floresiensis, was composed of pygmy animals, so it was a natural environment for them. They would not have perceived themselves to be small.
This sub-species developed from one of the first branches of humans that walked upright, going back two million years. Their direct forebear, Homo erectus, was larger than modern humans. It roamed over a large part of Asia.
Isolation on a small island led to dwarfism occurring. All mammals progress this way when trapped in a limited domain, though reptiles get larger. It was doubtful that they hunted the much bigger reptiles. If their environment was more challenging they would have developed larger brains. A small brain was sufficient. They did use flaked stone points in their weapons. This points to Homo erectus having such knowledge.
Early Hobbits first arrived on Flores 95,000 years ago, before humans moved out of Africa, so they possibly shared the world with Homo erectus with no challenge from Homo sapiens. The problem is the gap between the demise of Homo erectus at 300,000 years ago and the branching off of the large version of the Hobbit. Apart from Homo erectus no direct ancestor has been found.