Besides 'Farmer Giles of Ham' and 'The Smith of Wootton Major', there's the exceptional 'Leaf by Niggle'. This "purgatorial story," as he once called it, is the closest Tolkien ever got to allegory, both of (his own) artistic creation and of everyman's progress through life, death and, eventually, paradise. Stylistically too, the story is an exception, revealing a kind of compassionate Kafka whose faerie realm might well just be a dream.
Niggle is a painter, slightly lazy and of the sort "who can paint leaves better than trees." Engrossed in an overly ambitious project of painting a Tree, which evolves into an ever widening landscape, Niggle keeps putting off a long journey ahead of him. His obnoxious neighbor, Parish, continuously disturbs him in his work with pleas for help with leaking roofs and a sickly wife.
Soon - too soon to finish his painting - Niggle is visited by an Inspector who sends him on his journey and repurposes the canvas and wood of his unfinished painting to mend his neighbor's roof. Niggle ends up in a strange place that is "more like being in a prison than in a hospital."
He had to work hard, at stated hours: at digging, carpentry, and painting boards all one plain colour. He was never allowed outside, and the windows all looked inwards. They kept him in the dark for hours at a stretch, 'to do some thinking,' they said.
After an indeterminable time, Niggle finds himself lying in the dark, hearing Voices, judging him.
'...of course, he is only a little man. He was never meant to be anything very much; and he was never very strong. Let us look at the Records. Yes. There are some favourable points, you know.'
'Perhaps,' said the First Voice; 'but very few that will really bear examination.'
'Well,' said the Second Voice, 'there are these. He was a painter by nature. In a minor way, of course; still, a Leaf by Niggle has a charm of its own. He took a great deal of pains with leaves, just for their own sake. But he never thought that that made him important...'
In the end, Niggle is sent on his way to a country that seems strangely familiar...
Before him stood the Tree, his Tree, finished. If you could say that of a Tree that was alive, its leaves opening, its branches growing and bending in the wind that Niggle had so often felt or guessed, and had so often failed to catch.
Niggle becomes a gardener in the land he once envisioned and tried to paint, and Parish soon arrives to help him. Together they work the land and create, indeed, a paradise. While back in his former life a scrap of Niggle's painting has survived and ends up in a museum:
...and for a long time 'Leaf by Niggle' hung there in a recess, and was noticed by a few eyes. But eventually the Museum was burnt down, and the leaf, and Niggle, were entirely forgotten in his old country.