The Silmarillion represents the one unified text that gives the history of Middle-Earth before the events of The Hobbit and The Lord of the Rings.  Best to read The Sil (probably twice through as Curious suggests below) before approaching The History of Middle-Earth or even The Unfinished Tales, which will fill in some of the blanks.  The fragments in the HoME and UT are often better, but it's easy to get lost without The Sil as your road map.

JRRT never finished The Silmarillion:  what CT published as The Sil is his edit of JRRT's words.  A finished verions was probably an impossible task -- consider that the LoRT needs 1,100 pages to cover only about six months of narrative.  Either The Sil, which covers many thousands of years (with the strongest emphasis on about five hundred years) would have to be hundreds of thousands of pages in length, or would have to read more as it does, a quick overview with highlights.  Ideally it should perhaps have been a series of novellas (in the LotR style) and poems, with a set of appendices dwarfing those in the LotR.  In some ways that's what you get in the HoME, but with three versions of any given tale and voluminous notes, however interesting, the reading can feel more like work than enjoyment. 

The problem of consistency, which had already led JRRT to revise The Hobbit, kept getting in the way.  (Consistency both within the text and with the real world:  for example, as first conceived, the world made round and the creation of the sun and moon are part of a history, events experienced by elves or men; later Tolkien thought about rewriting the story so that the sun, moon and round world predated history as part of the first bloom of Creation.)  The demands of JRRT's life also got in the way.  Too bad.