The thrush that had attracted Bilbo's attention outside the secret door to the Lonely Mountain is revealed to be Roäc son of Carc. He tells Bilbo and the dwarves that Smaug is dead and that they should not trust the Master of Lake-town, but Bard. Thorin, assuming his ancestral role as King under the Mountain, sends the thrush for Dain in the Iron Hills.
Thorin wants to go back to the Mountain. The dwarves work to fortify the mountain against the Elvenking; as they work, the ravens bring them news. The elves pitch camp and make merry; the dwarves then make merry, as well. Bard approaches to parley with Thorin. He refuses as long as Bard's men ally with elves. Bard's men leave and then his banner-bearers return with a demand for part of the hoard if they come to the aid of the dwarves. Thorin refuses and tells them to consider themselves under siege.
Bilbo and the dwarves learn that the death of Smaug does not completely bring an end to their troubles. The thrush advises the dwarves and Bilbo whom to trust at Lake-town. You see in this chapter the factions and alliances beginning to form that will result in the terrible Battle of the Five Armies. It appears that Smaug's power extends almost beyond his death, in an ability to incite enmity among creatures who, in other circumstances, might enjoy making merry with each other.
parley an exercise in diplomacy; a talk with the goal of resolving conflict.