There have been many updates involving hobbies and additions/changes. I do my best to keep updating the links below, but some information is 'outdated' in the sense that rewards have been lowered since the last update of the article.
Most work according to the same principle, once you have a high skilled sim, others can unlock high level cards even if they're only level 1. The most experienced sim's level in town counts. You don't need to keep a level 6 hobby sim, once you've unlocked the collection of that hobby. The only reason for keeping one, might be participation in the Competition Centre.
Note: as of the Neighbours Update it is possible to start and do most hobbies in a neighbour's town, provided they do have the requirements.
Completing a row gives you a bonus. Completing all the 12 collectibles (cards) unlocks a special item. Once you've unlocked/received all the specials, every hobby rewards you with 3 LPs for completing the collection. Some hobbies have more than 12 and thus have a higher amount of XPs/completion rewards, they will be added at some point.
The grid is laid out in 3 by 4 squares and are levelled as follows:
Bonus
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Level 1
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Level 1
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Level 1
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750 XP
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Level 2
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Level 3
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Level 3
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1000 XP
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Level 4
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Level 4
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Level 5
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1500 XP
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Level 5
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Level 6
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Level 6
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2000 XP
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General tactic: Use short bursts of 4 (10 with latest update) mins sessions of a hobby (3:30 for Ghost Hunting items) for collecting. Using longer times works as well, but generates less experience.
* With the Life Dreams and Legacies update the minimum time is now 10 mins.
Ghost Hunting: Up to 10 sims can participate on one lot. Requires 'haunted' objects which are marked with a tiny red ghost in the home-store.
Unlocks: "Ghost Containment Tank".
Pros: Every 3 taps when catching a ghost gives XPs/§s/LP.
Cons: Tapping the ghost three times can be tricky on small screens. (Haunted items need to recharge (10-30 mins) as of the Teen Update!!) There are two more rows added since.
Fishing: You need the park for it and only one sim can participate at a time.
Unlocks: "Fishersim Outfit" and "Fish themed Posters and Wallpapers" when finishing a second collection.
Pros: none
Cons: only 1 sim can do this, no others can participate at the same time. Catching an already collected fish doesn't give any reward. (Except when starting a new collection). Two more rows have been added with the "Anglers and Mutants Quest".
Woodworking: You need the community centre. This hobby can be done by 3 sims simultaneously on the upper floor, pre-teen sims can practice karate or ballet on the ground floor.
Unlocks: "Woodworking Bench" (so you can do it at home too). It will be available from "Promotions 'R US" when unlocked. "Free Premium Dog Kennel" for the second time and "Free Foosball Table" for the third time completing all the collectables.
Pros: Can be done at home after the first collection completion (and buying a woodworking bench) and by multiple sims at the same time (three at the community centre at the start).
Cons: tapping game for catching the doll (only at the Community Centre) can be frustrating, especially on a small screen.
Fashion Design: The "Fashion Studio" can be bought from the "Promotions 'R US" for §2500 and placed at home (requires 2x2 squares).
Unlocks: "Fashion Outfits" the first time, "Lucky Hat" the second time. (Use "Start a New Collection" to clear the grid and go for the next collection).
Pinball: Requires the Arcade (costs 1 bronze and 1 silver orb OR 150 LPs) + Pinball Machine (costs orbs or 1050 LPs!)
Unlocks: higher level pinball machines per row and finally (collecting 18 ranks) one for at home. After that 3 LPs.
(Toddlers/Preteens) Collecting Shells: Requires Public Beach (costs orbs or 300 LPs). Reward for completing 24 shells: Hats and Seashell Earrings, after that only 3 LPs.
Pros: A toddler hobby
Cons: This can only be done on 'certain times of the day', there are shells for noon, dusk, night and dawn. Waiting times between collecting varies from 20 to 60 mins!
(Teens/Adults) Snorkelling: Requires Beach (costs orbs or 300 LPs) and Snorkelling Hire Kiosk (costs orbs or 880 LPs!)
Unlocks: new snorkelling locations and for collecting 18 treasures you unlock 'inflatable seals' and 'comfy beach towels', after that only 3 LPs.
Cons: requires § payments
Pre-Teens, Teens and Adults:
Diving: Requires Swimming Pool (in town). Up to 4 sims can participate simultaneously.
Unlocks: "Diving Boards" so you can practice at home too. After that 3 LPs
Pre-Teens, Teens and Adults:
Figure Skating: Can be done at the "Snow Park" or at home on the pool, provided you've installed a weather machine and switched to 'Snow".
Unlocks: "Key to Ski Lift" (at the Snow Park), the second time completing the collection unlocks "Figure Skating Outfit", after that 3 LPs.
Hobbies for Pre-Teens only:
Ballet: Can be done at the ground floor of the community centre. No collectibles while practising, gives only experience and XP points, but unlocks various hobby-related items while completing levels. For at home, a "Record Player" like at the community centre is available from the home-store.
Karate: Can be done at the ground floor of the community centre. No collectibles while practising, gives only experience and XP points, but unlocks various hobby-related items while completing levels. A "Sparring Dummy" for at home like at the community centre is available from the home-store.
Skill Testing: Requires Arcade (costs orbs or 150 LPs) and Skill Tester (costs orbs or 930 LPs)
Unlocks: one new skill testing machine per row and finally (collecting 18 skills) one for at home, after that 3 LPs
Teens only:
Music Writing: Can be done at a home only. You'll be guided through the hobby during the Road to Fame quest. You'll unlock several music instruments for your teen.
Arcade Gaming: Requires the Arcade (costs orbs or 150 LPs).
Unlocks: Rewards: unlocks new arcade machines with each completed row and final (collecting 18 ranks) All in One Arcade Game for at home, after that 3 LPs.
Hobbies for Seniors only:
Bird Feeding: Can be done by 1 up to 4 senior Sims, but requires to use multiple locations and durations to complete the collections.
Unlocks: Parrot in a cage, after that 3 LPs
Quilting: Can only be done by one Senior Sim per Quilting Kit.
Unlocks: Three types of patchwork furniture, which can be bought from the Home-Store. After that 3 LPs.
Finally a quick word about the "Competition Centre". It was designed to keep your sim busy, hope for the 1st place and earn 3 LP. The problem is the time involved. Now it takes 24 hours to have a sim compete. If he/she has a high level career/school, they probably earn more in a few hours at work/school than waiting for a 3rd place reward (or 4th place for pre-teens if comparing by income). Your sim needs to be a high level in whatever the competition is about to stand a chance on winning LPs. In my experience you earn more LPs by doing challenges and from cats and dogs than competing.
I have closed the comments for this post, if you are having trouble, please use the unofficial forum, there are many people there who can and likely will answer your questions: http://simsfp.perturbee.net
Technical support (if your game does not work as expected, like no goals, no building options, crashes and such) use: https://firemonkeys.zendesk.com/
