"Good Morning!" said Bilbo,
 ...and he meant it.
 But Gandalf...
"What do you mean?

this is probably a literary device designed
to act as a 'hook' to get the reader interested.
the point was to cause a heartbeat worth of suspense:
nice hobbit haplessly offends potent wizard.

but as the sentence finishes the listener realises with relief that:

1. potent wizard is not at all offended by nice hobbit
   
2. they both enjoy playing games with semantics
   
3. they are old friends at ease with one another
   
4. witty hobbit is witty (even with wise, old wizards)

"Good Morning!" said Bilbo,
 ...and he meant it.
 But Gandalf...
"What do you mean?

This is probably a literary device designed to act as a 'hook' to get the reader interested. The point was to cause a heartbeat worth of suspense: nice hobbit haplessly offends potent wizard.

But as the sentence finishes the reader realises with relief that: 

1. Potent wizard is not at all offended by nice hobbit
   
2. They both enjoy playing games with semantics
   
3. They are old friends at ease with one another
   
4. Witty hobbit is witty (even with wise, old wizards)