The readers understanding would change without different points of view shown through dialogue because without characters point of view shown through dialogue there is nothing there to form the readers opinion and understanding of the characters feelings and thoughts. In the Hobbit, dialogue is very important for the readers understanding. For example, Bilbo Baggins shares his thoughts, feelings, and ideas throughout his adventures, along with many other characters. Without Bilbo expressing his point of view through dialogue, the reader would have no idea what he is feeling, along with all of the other characters, Dialogue builds a picture in the readers head and without that picture the reader won't have an accurate idea of what the author intended the reader to think.
