The Big Folk and the Little Folk (as they called one another) were on friendly terms, minding their own affairs in their own ways, but both rightly regarding themselves as necessary parts of the Bree-folk. Nowhere else in the world was this peculiar (but excellent) arrangement to be found.

Then suddenly straight over the rim of their sheltering bank, a man fell, crashing through the slender trees, nearly on top of them. He came to rest in the fern a few feet away, face downward, green arrow-feathers sticking from his neck below a golden collar. His scarlet robes were tattered, his corslet of overlapping brazen plates was rent and hewn, his black plaits of hair braided with gold were drenched with blood. His brown hand still clutched the hilt of a broken sword.
It was Sam's first view of a battle of Men against Men, and he did not like it much. He was glad that he could not see the dead face. He wondered what the man's name was and where he came from; and if he was really evil of heart, or what lies or threats had led him on the long march from his home; and if he would not really rather have stayed there in peace - all in a flash of thought which was quickly driven from his mind.

From Who is Tom Bombadil? by Gene Hargrove

In a letter written to the original proofreader of the trilogy in 1954, Tolkien reveals a little about what Tom's literary role or function might be. Early in the letter he writes that "even in a mythological Age there must be some enigmas, as there always are. Tom Bombadil is one (intentionally)". Later he adds that "Tom is not an important person - to the narrative. I suppose he has some importance as a 'comment'." He then goes on to explain that each side in the War of the Ring is struggling for power and control. Tom in contrast, though very powerful, has renounced power in a kind of "vow of poverty," "a natural pacifist view."