There are four hobbits in the Fellowship of the Ring--Frodo, Sam, and these two guys. Frodo's quest to destroy the One Ring is the main plot in LotR (even though he actually fails), and Sam is his loyal friend and protector.
But the importance of 'Merry' and 'Pippin' is unquestionable. While Frodo and Sam are off dealing with wastelands and spiders and orcs, Merry and Pippin are introduced to the human world.
Merry is made King Théoden's squire after the Ents attack Isengard. But when Théoden rides south to Gondor, he doesn't take Merry along, so Merry hitches a ride with Dernhelm (really Éowyn in disguise). At the Battle of the Pelennor Fields, Merry helps Éowyn slay the Witch-King of Angmar. He's later knighted for his heroic deeds by Éomer.
Pippin, on the other hand, rides into Minas Tirith with Gandalf mere days before it falls under siege. Denethor II likes him so much that he gives the hobbit a special seat beside his throne. But when Denethor goes mad and tries to kill himself along with his unconscious son Faramir, Pippin runs to Gandalf for help, pulling the old wizard out of the middle of battle to save the kind captain from his father's wrath.
After the War of the Ring, these hobbits return home to great fame and respect from their own kind, having already gained it from the race of men.