The gist of it is, characters such as Bilbo, creatures such as hobbits and imaginary places such as Hobbiton are objects in some sense. And if they are, and given that the fiction is all the information we have about them, these objects must be in some sense incomplete. We are not told what Bilbo's mother was called. So she is incomplete, not having a name. Indeed, we are not told whether Bilbo had a mother at all. So, he is incomplete. And so on.
Now this really is language on holiday. Suppose I write:
In 1998 a planet the size of Jupiter was miraculously created in the orbit between the Earth and Venus.
Does writing this miraculously create a fictional object the size of Jupiter? And does it get created just now, in May 2008, or 10 years ago in 1998, when it was claimed to have been created? Or should we be more prosaic and say that no object was created at all? For it says above that such a planet was created, and, as far as we know, no such planet ever was.
And if we do believe some object has just been created, is it really incomplete in the sense that Vallicella et alia suggest? Isn't it just the reverse? I can go on to make any false statement I like about this planet: it is a gas giant, not a gas giant, has frozen helium at its core, a black hole, whatever. Since any statement 'about' this planet has to be false, it does not matter what I say. All are equally incorrect. For information about x to be truly incomplete, there has to be at least the possibility that there are further true statements that could be made about x, i.e. statements that say that x is so, and where x is in fact so. No such possibility exists in this case. For example I can say
In 1998 a planet the size of Jupiter was miraculously created in the orbit between the Earth and Venus. It was made entirely of iron.
Which simply adds more falsity to what is already there. There is a great temptation to talk like this, and many serious and respectable people do. Perhaps it is enlightening, from the standpoint of human psychology, that they do. But perhaps it ought to be resisted.