: This seems rather small, considering the importance of the Lake Men in the battle, and the fact that Esgaroth is clearly a town. There are also no surrounding hamlets and farms where people could live; if there had been (and I think we`re told there weren`t) the townsmen would have taken refuge there when their homes were lost. Such a low figure would make it no more than a villiage, and not an especially large one: Bree is certainly bigger and is called (most of the time, as I remember) a villiage. On the other hand, a maximum of 400 people does seem a reasonable estimate for the town pictured in the author`s drawing. I think that even that would make it crowded.

: Should I conclude that Esgaroth was in fact exceptionally crowded (which is often true of towns constructed on constricted sites for the sake of defence, although it would have made it quite a sacrifice for them to give up a large house to the dwarves for some weeks); or did Tolkien put some artistic license into his drawing, intending to give a clear impression of what the town was like, and the scene outside with the barrels, but, just as medieval manuscript representations of towns didn`t include everything, Tolkien saw no need to try and cram in every house into the drawing - especially as the human eye doesn`t always see things exactly as they would appear in a photograph anyway?

: Or was lake Town really quite as small as that after all?

A population of 400 does seem too small for what was apparently an important settlement, even in Tolkien's rather sparsely inhabited world. Artistic licence seems to be the ruling factor in Tolkien's illustration, after all to show the whole of a large settlement would reduce detail to almost nothing.