From The Digital Antiquarian's article on "The Hobbit":
Megler  recruited a partner to work with her on the game, Philip Mitchell , a fellow senior with whom she had already worked on a number of group projects and whom she knew to be both easy to get on with and a skilled programmer. Milgrom  himself added a third member to the team specifically to help them with the parser: Stuart Richie, who was doing a dual degree in English linguistics and computer science, with a special interest in combining the two fields.
Mitchell worked on a full-sentence parser that would allow the player to talk to the other characters in the world and even order them about. He called his system “Inglish.” Together, the code for the engine and the parser was eventually squeezed down to about 17 K, leaving the rest of the memory for Megler’s database. Richie, who was employed by Melbourne House for only a few months, contributed no code, and his ideas ultimately had little influence on the system. Milgrom’s idea of hiring a linguistics expert to develop a parser is one of those that sounds better in theory than it works in reality.
The parser is beset by problems of its own. It does understand a lot, including, for the first time anywhere to my knowledge, adverbs. It’s possible, for instance, to “viciously attack the mean goblin,” although I’d be shocked to learn that it doesn’t just throw away the adverb as it does articles. Yet in other ways, especially in early releases, it’s very frustrating to work with. It’s possible to “climb into the boat,” but not to “enter” or “get in” it; possible to ask Thorin to “carry me,” but not to ask him to “take me” (talk of randy dwarfs aside, no double entendre intended); possible to “look across the river”, but not to “look over” it.
And from an Interview with Veronika Megler (The Register, 2012):
The Hobbit stood out from the adventure games of the day in three ways, the first of which was its use of graphics. Many scenes in the game included a colour image that may have drawn at painfully slow speed but still offered a far richer experience than the text-only adventures of the day.
The second key innovation was 'Inglish', a parsing system that went far beyond the verb/noun syntax most games at the time allowed. Inglish lets players enter whole sentences of text as they sought to complete a quest that paralleled the plot of Tolkien’s famous novel.
A third and less obvious innovation was the game engine Megler created.
Analysis of the game that attributes its success to Inglish also irritate [her] just a little, as fans tell Megler that they didn't use much of the vocabulary it offered but did appreciate the ability to use different objects in imaginative ways that she [built] into the game's engine.
And finally from the Wikipedia entry:
The game had an innovative text-based physics system, developed by Veronika Megler. Objects, including the characters in the game, had a calculated size, weight and solidity. Objects could be placed inside other objects, attached together with rope and damaged or broken. If the main character was sitting in a barrel which was then picked up and thrown through a trapdoor, the player went too.
The parser was also a real-time capable, even if the player didn't enter commands, the story would move on:
Unlike other works of interactive fiction, the game was also in real time - if you left the keyboard for too long, events continued without you by automatically entering the "WAIT" command with the response "You wait - time passes". If you had to leave the keyboard for a short time, there was a "PAUSE" command which would stop all events until a key was pressed.
This was neccessary since the game's NPCs (Non-Player-Characters) and monsters were
[...] entirely independent of the player and bound to precisely the same game rules. They had loyalties, strengths and personalities that affected their behaviour and could not always be predicted. The character of Gandalf, for example, roamed freely around the game world (some fifty locations), picking up objects, getting into fights and being captured.
The game manual (Part 1 & Part 2) states that:
[the parser] knows over 500 words and can perform over 50 different actions (combining verbs and prepositions)"
The available vocabulary is quite small, though:
THE INGLISH VOCABULARY:
NORTH (N) NORTHEAST (NE)
SOUTH (S) NORTHWEST (NW)
EAST (E) SOUTHEAST (SE)
WEST (W) SOUTHWEST (SW)
UP (U) DOWN (D)
BREAK FILL SAY
CLIMB FOLLOW SHOOT
CLOSE GIVE SWIM
CROSS GO TAKE
DIG KILL THROW
DRINK LOCK TIE
DROP PICK TURN
EAT PUT UNLOCK
EMPTY OPEN UNTIE
ENTER RUN WEAR
EXAMINE LOOK (L) QUIT
HELP NOPRINT SAVE
INVENTORY (I) PAUSE SCORE
LOAD PRINT WAIT
ACROSS INTO THROUGH
AT OFF TO
FROM ON UP
IN OUT WITH
For me this means, that "The Hobbit" is not so much defined by the "Inglish" parser itself (which is not that advanced by today's standards - compare the various available chat bots), but by the interplay of a for the time advanced parser with a versatile and flexible game engine.
 Veronika Megler, then a student in her final year as an undergraduate with an interest in database design. Personal page: http://web.cecs.pdx.edu/~vmegler/ April 2002 Interview
 Philip Mitchell, recuited for Melbourne House by Veronika Megler in 1982. Also worked with Megler on Penetrator (1983). Continued to write games for Melbourne House/Beam Software until 2000. Further info: http://playitagainproject.org/creators/philip-mitchell/
 Alfred Milgrom, founder of Melbourne House/Beam Software (together with Naomi Besen). He hired Veronika Megler to "Make the best adventure game ever. Period." Further info: Australian Gaming Database