There clearly is Good and Evil in Tolkien's world. He even bothers to capitalize that the elves are Good People. "Good" races like the elves and "bad" races like the Wargs seem to suggest that morality is black and white in The Hobbit. Yet, there's a surprising amount of grey too: the dwarves are on a quest for gold, not to destroy the evil that is Smaug. Yes, revenge is one motive, but the dwarves seem to care more about treasure than about abstract ideas of right and wrong. And even though the Battle of Five Armies is between good and evil sides, Bilbo's main take-away from the experience is that battle "seems very uncomfortable, not to say distressing" (17.62). The human cost matters to him more than the cause his friends are fighting for. So The Hobbit's take on good and evil is a little more subtle and nuanced than we first thought.