Bree was a very ancient settlement of men in Eriador by the time of the Third Age of Middle-earth, but after the collapse of the kingdom of Cardolan, which had claimed it, Bree continued to thrive without any central authority or government for many centuries.
Bree was the most westerly settlement of men in all Middle-earth by the time of the War of the Ring, and became one of only three or four inhabited settlements in all of Eriador. During the War of the Ring a days ride east from the village along the road lay The Forsaken Inn, according to Aragorn, although nothing else is known of that place.
Directly west of Bree were the Barrow-downs and the Old Forest. Bree was the chief village of Breeland, a small wooded region near the intersection of the main north-south and east-west routes through Eriador. Breeland was the only part of Middle-earth where Men and hobbits dwelt side by side.
The name Bree means hill, according to Tolkien, referring to the fact that the village of Bree and the surrounding Breelands were centered around a large hill. Bree was on the south-western side of Breehill and there were three villages in Breeland in addition to Bree proper.
- Staddle was populated primarily by hobbits who made a living from light agriculture, of pipeweed, primarily. Staddle was on the south-eastern side of Breehill, sitting south of Combe and Archet. It was the only of the villages (other than Bree itself) visible from the Great East Road.
- Combe was populated primarily by Men, with some hobbits, all of whom made a living from agriculture. Combe was situated on the borders of the Chetwood and on the edge of Breehill, between the villages of Archet and Staddle.
In The Fellowship of the Ring, Frodo Baggins met Strider (Aragorn) at the largest inn in Bree, The Prancing Pony, owned by Barliman Butterbur. Later on in Fellowship, some men in the service of the Ringwraiths (and possibly Saruman) broke into the room where the Hobbits intended to sleep, but Strider had anticipated trouble and stayed with them in the parlor through the night. The hobbits also returned to Bree near the end of the story, on their way home.
Bree is also the place where, earlier, seemingly by accident, Gandalf and Thorin Oakenshield met. They were both thinking about the same problem: the Dragon Smaug at the Lonely Mountain. The meeting led to the undertaking of the Quest of Erebor, which resulted in the death of Smaug and the finding of the One Ring by Bilbo Baggins. If Smaug had lived until the War of the Ring, he would have posed a serious threat.
In Peter Jackson's The Fellowship of the Ring, Frodo and his companions arrive at Bree almost immediately after the scene in which they leave the Shire, giving the impression (perhaps unintentionally) that the two are much closer together than described by Tolkien.