While it could be down to simple nerves, Bilbo was hesitant to give the dragon his full name. He was well aware of the destruction Smaug could cause and didn't want to give him any hints as to where he may live.
In the conversation between Smaug and Bilbo, Bilbo calls him "Smaug the Tremendous", "Smaug the Chiefest and Greatest of Calamities", "Smaug the Mighty", "Smaug the Unassessably Wealthy", "Lord Smaug the Impenetrable" and "Your Magnificence", and later Bilbo refers to him as "Smaug the Terrible" and "Smaug the Dreadful ...
Bilbo is invisible because he is wearing his ring, but Smaug can smell him.
Unsuccessful, he returned to his hoard to lie in wait. The Dwarves sent Bilbo down the secret tunnel a second time. Smaug sensed Bilbo's presence immediately, even though Bilbo had rendered himself invisible with the One Ring, and accused the Hobbit (correctly) of trying to steal from him.
In The Hobbit The Desolation of Smaug, Bilbo can understand the spiders when he wears the ring because, all spiders in middle earth come from Ungoliant, an ancient evil in the shape of a spider who allied with Saurons master.
Peter Jackson certainly makes the assertion in the theatrical and extended editions of the Hobbit movies that Smaug and Sauron are not only well aware of each other, but are planning to ally with each other. Smaug even seems to have detailed knowledge of Sauron's coming plans.
Also, Cumberbatch's Smaug certainly seems like the type who would gloat at someone even when he knows they can't understand him. The only other person that the dragon speaks to, just before flying to Lake-town, is Thorin Oakenshield.
Although both the Balrog and Smaug are creatures of fire, and Gandalf is able to match them thanks to the power of his fire ring, defeating the Balrog takes far more spiritual prowess, which is why Gandalf is able to essentially 'level up' and comes back as Gandalf the White, whereas defeating such an immense physical ...
Smaug did not know that Bilbo had the one ring. Unlike the Nazgul, Smaug couldn't detect the presence of the ruling ring. He had no way of knowing that Bilbo had it, was using it, or that it was the power of the ring that made it impossible for Smaug to find Bilbo. Smaug's fire could not destroy the one ring.
Smaug's dragon-fine would not have been hot enough to destroy the One Ring. The malevolence that Sauron put inside of the Ring could only be destroyed in the Cracks of Doom, so Frodo was compelled to make the journey to Mordor.
One of the examples of situational irony from the story is when Bard kills Smaug with some unexpected results. ''With a shriek that deafened men, felled trees and split stone, Smaug shot spouting into the air, turned over and crashed down from on high in ruin.
Smaug knows that Bilbo is a thief working with the dwarves. Bilbo's description of “barrel-rider” leads the dragon to believe that Lake-town is involved in the scheme. Smaug is still puzzled at what Bilbo is since Bilbo is wearing the ring and Smaug has never sniffed a hobbit before.
Bilbo, meanwhile, regrets calling himself “barrel-rider,” since this will cause Smaug to think of Lake-town and to attack it.
He represents the wrongful impulse to hoard, to accumulate beyond what one can use and to refuse to share with others. In revenge for the theft of the Arkenstone, he destroys the town of Lake-town (Esgaroth).
Yet, with Smaug being a dragon, he may have shared the same traits as real-world reptiles -- most notably, their ability to go long periods without eating. Many reptiles have a form of hibernation called brumation, where they'll slow down to conserve energy over winter and not require any food.
Conclusion: the drakes of the last days of the third age were probably too weak, too far away and simply too uncontrollable to be of any use.
Smaug is Not The Strongest Dragon
Undeniably, Smaug is the Greatest Dragon left in Middle Earth during the Third Age. Yet, he is not the strongest in its history. That title falls to Ancalagon the Black, the largest dragon ever to have existed in Middle-earth.
The first is that Bilbo is a hobbit, and as such, is particularly difficult to manipulate or corrupt. Hobbits have a natural resistance to the influence of the ring, because they are fully content in their simple lives and have no desires for power or war.
Sauron and Smaug would have fit perfectly as allies: Smaug wants gold and riches but he is not interested in ruling over something or someone. Sauron wants to rule over all of Middle-earth but cares little if anything for riches and treasures.
First of all, Godzilla is much larger and heavier with a proven record of being tough as hell. Second, Godzilla has experience fighting other monsters while Smaug has been defeated twice by mortals and likely has never fought another monster.
Sauron, by a landslide. Sauron is a Maia, an angelic being with great power. If we're talking about Sauron at the height of his power, back in the 1st/2nd age, Smaug would never stand a chance. While Smaug is big and whatnot, in comparison to other dragons in the history of middle-earth, he's pretty small.
Over the next 17 years, Gandalf travels extensively, searching for answers on the ring. He finds some answers in Isildur's scroll, in the archives of Minas Tirith. Gandalf searches long and hard for Gollum, often assisted by Aragorn, who eventually succeeds in capturing Gollum.
Smaug was a fire-drake of the Third Age, considered to be the last "great" dragon of Middle-earth. He was drawn to the enormous wealth amassed by the Dwarves of the Lonely Mountain during King Thrór's reign.
Smaug was the last named dragon of Middle-earth. He was slain by Bard, a descendant of Girion, Lord of Dale.
[The Hobbit / LOTR] Smaug was once a human(oid) or a dwarf, transformed into a dragon through magic.