The Halflings of Altera reside primarily on a small island called Hillshire.
(The history of the Halflings and their association with The Greylings will be posted soon)
You can get to Hillshire via ship from Port Silver to Daggerfall and then Air Balloon from Daggerfall to Hillshire.
If you roleplay a Halfling and are interested in setting up a hobbit hole on the island then please post your application on the House Overhill forum providing some background on your character.