The remains of LB1, or Homo floresiensis, tell us our global dominance is far more recent than we thought.
Legends on Flores talk of small "murmuring" people called the Ebu Gogo
We shared the planet with other intelligent beings until a mere 12,000 years ago.
BBC News Online looks at some of the questions that the "Hobbit" raises.
Q: Why is this discovery so exciting?
In short, it could change our understanding of human evolution. For example, we tend to think that complex tool making comes with big brains. But LB1 had a tiny brain and yet made quite sophisticated tools. This will probably cause researchers to re-think the behavioural complexity and capabilities of our small brained ancestors.
And, according to conventional wisdom, humans have walked the Earth alone since Neanderthals died out about 27,000 years ago.
But if LB1 was alive until 12,000 years ago, what other hominids also shared our planet? This discovery has reignited the debate.
Q: Could LB1 be a one-off?
Almost certainly not. Researchers now have the remains of at least seven Hobbit-sized individuals at the cave site, so the 18,000-year-old skeleton was not alone. The other individuals all have similar features, and they lived from as long ago as 95,000 years to as recently as 12,000 years ago.
The little hominids seemed to disappear at the same time as the pygmy elephants, called Stegodon, that they hunted, and they disappear at Liang Bua after a volcanic eruption
But local folklore suggests they might have survived into recent times.
The local inhabitants of Flores talk of little people that lived in the forests and, according to legend, the "Hobbits" were still on Flores when Dutch settlers arrived in the 19th Century.
Q: Could LB1 have been a small human being?
No. The shape of LB1's skull is just too different for it to be a Homo sapiens. Furthermore, human pygmies show very little reduction in brain size.
LB1, on the other hand, had a brain of only 380 cubic centimetres - about the same size as a chimpanzee's brain.
Q: If it is so different, how can we be sure it belongs to the genus Homo at all?
Researchers say it could not have belonged to another family of human-like creatures, such as Australopithecus, because key aspects of its morphology - such as its small canine teeth and the shape of its skull - identify it as a hominid.
Q: How did these little people reach Flores?
Nobody knows for sure. The presence of 800,000-year-old tools on the island raises the controversial possibility that Homo erectus produced them, and had crossed major sea barriers to reach Flores. If this is the case, then LB1 may have evolved on the island from their much larger H. erectus ancestors.
Q: Did they ever come face to face with humans?
There is no firm evidence that they did. However, humans had reached Australia by about 45,000 years ago, so they were in the area at the time. And, given the long overlap period between the two species, some researchers think it is likely they did run into each other.
And if there is any truth in the legends, the inhabitants of Flores did meet small "murmuring" people, which they called the Ebu Gogo.