Those enigmatic bones from the island of Flores interpreted to be the remains of a 3 feet tall hominid known as Homo floresiensis are making waves again. This tiny hominid lived as recently as 17,000 years ago. Bones are associated with stone tools, an indication that this creature had some smarts.
There are three main hypothesis as to where to place this creature within the hominid family tree.
1) Ancestor Homo erectus migrated to Flores island maybe more than a million years ago and then that population shrank in stature, a process known as insular dwarfing. Also some reversal in traits occurred, a hypothesis required to explain the primitive (ancestral state) nature of wrists and feet.
2) Descended from an ancestor even older than Homo erectus ...maybe Homo habilus..? and then underwent dwarfism on Flores island. Could explain the puzzling primitive traits (wrists and feet) in the descendant hobbits and the small brain size. One problem with this hypothesis is that no other fossil hominids earlier than Homo erectus are known outside Africa ...so far.
3) Bones belong to diseased modern humans. No special evolutionary scenario required.
There's been lots of reading about some of the latest findings on Hobbits. I found this review on the Origins blog most well written and information. NY Times also has a couple of good articles here and here.
One thing that has struck me about this debate is how integral the field of developmental biology is becoming in fashioning evolutionary hypothesis not just to explain trends in size and shape and novel features but to ascertain ancestry and evolutionary relationships.
And bridging these two fields in this case is not molecular genetics, embryos and Hox genes ..... but bones.