 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.During his discourse with the dragon, Bilbo noticed a small bare patch on Smaug's jewel-encrusted underbelly, and narrowly escaped.A thrush overheard Bilbo's account of the meeting, and learnt of the bare patch on Smaug's underside.