In the excerpt from "The Fellowship of the Ring," an element of fantasy is evident in the description of the old man and his companions. The presence of dwarves with long beards and deep hoods, along with an individual wearing a tall pointed blue hat, a long grey cloak, and a silver scarf, adds a fantastical touch to the setting. This portrayal of outlandish folk singing strange songs reflects a world beyond the ordinary, introducing elements of fantasy and whimsy.