The world was pretty well developed, but The Hobbit isn't really set in it. The Hobbit was retconned into his broader Middle-earth as the sequel grew in the telling. He'd been re-writing the material that became The Silmarillion for decades. (And he offered it to the publisher instead of a Hobbit sequel, and they said "what else ya got?)

This despite the fact that some names and elements were re-used. He often cycled the same names around until he found where they fit. Which also makes reading early drafts of the Hobbit fun when Thorin was named Gandalf.