While The Silmarillion felt like a pretty well connected series of tales, this book is not of the same quality. It gives a lot of background to the history of Middle Earth, but only the really dedicated Tolkien fan will enjoy it.
After Tolkien’s death, his son Christopher set about compiling all the notes and stories he had left behind about Middle Earth. The Silmarillion is the most well know result of this work, and chronicles the story of the elves in times long before the events of The Lord of the Rings. It takes the form more of a historical chronicle than a novel, and so feels rather removed from the action. Only for the dedicated Tolkien fan.
I can’t add very much to what has already been said about these books. One of the remarkable achievements of The Lord of the Rings is that it has firmly made a place for itself in the mainstream, without so much as a deprecating comment about it being fantasy. The Hobbit is more of a children’s book, and not really necessary to read in order to understand the story, but it is still a delightful tale and gives quite a bit of useful background. There are about a zillion different editions, but the complete cycle is composed of: