No, apparently this is just a local nickname for Nakalele because tourists engage in persistent rock stacking here, using the area's plentiful rocks to make countless little piles of balanced stones. Rock stackers must be considered by the locals to be hippy-dippy Lord of the Rings flower-children types. Hence . . . Hobbitland.
Actually, many Hawai'ians resent rock stacking by tourists. They see it as cultural desecration of their land. They will dismantle any rock stacks they find. Occasionally you will see signs forbidding rock stacking and advising that fines will be levied against anyone caught doing it.
[Photo by Debra She Who Seeks]