Unlike the other demi-human races in Dungeons & Dragons, gnomes have no analogue in the mythology of Middle Earth. Judging from the list of literary influences in the first edition of the Dungeon Master’s Guide, it seems likely that the inspiration for their inclusion was the work of Poul Anderson. In particular, gnomes appear in The Broken Sword as well as Three Hearts and Three Lions. Whilst in the former their depiction is brief, but separate from that of the mountain dwelling dwarves, in the latter gnomes are synonymous with dwarves, and are indeed only referred to as such. This goes a long way towards explaining why they are classified as the same troop type in the Chain Mail Fantasy Supplement, but are nevertheless somewhat differentiated in the original edition of Dungeons & Dragons. Moreover, it sheds light on the decision to later present them as a separate playable race in the Advanced Dungeons & Dragons Player's Handbook. Simply put, gnomes had originally been conceived as a type of dwarf within the game framework and so already were a playable demi-human race from the start. It can reasonably be surmised that this was changed because dwarves were perceived to be eclipsing gnomes as a potential archetype.
Of course, this strikes at the heart of the matter, in that the gnome is a relatively weak archetype that has not subsequently been able to establish itself firmly at the centre of the corpus. Perhaps the most significant and unavoidable difficulty is that it is vying for much of the same conceptual space that the dwarf already fully occupies. The first attempt to differentiate them from one another seems to have come with Strategic Review #6, where gnomes are listed as chaotic good and dwarves as lawful good. Whilst this was retained for the Holmes version of Dungeons & Dragons, it did not carry over into subsequent editions, perhaps because they reverted to the three point alignment system. Neither, however, was this distinction retained for Advanced Dungeons & Dragons, even though it used a nine point alignment system. Instead gnomes were classified as neutral to lawful good, which in second edition became just neutral good. Most likely these neutral to lawful alignment designations refer to the opposition of law and chaos in Three Hearts and Three Lions, as that is roughly where gnomes and dwarves stand in that work. Still, it is not very useful in drawing a distinction between the two for swords & sorcery adventure games.
In the post Holmes Dungeons & Dragons monster entries for gnomes and dwarves there is little difference between the two races; one point of armour class, one point of average damage, thirty feet of infra-vision, an especial hatred of kobolds for the former and of goblins for the latter. For the most part this echoes their depiction in the Monster Manual, though gnomes and dwarves there have the same degree of infra-vision and overlapping racial animosity toward goblins. The advanced system also gives both races a resistance to magic and poison, as well as the ability to detect various facts about dungeon environments, such as depth underground and the gradient of sloping passages. Whilst the Monster Manual indicates that gnomes are around three feet tall, thus a foot shorter than dwarves, the Dungeon Master’s Guide suggests three and a half feet is average, closing the gap by half a foot. Probably it is no coincidence that the average height of gnomes in the former work is the same as that of Hogi the dwarf in Three Hearts and Three Lions. Either way, the height disparity appears to affect what creatures they get their defensive bonuses against, gnolls and bugbears being added to ogres, trolls and giants for gnomes.
As well as being physically smaller, the Dungeon Master’s Guide indicates that gnomes also have a lower average strength than dwarves, being 10 and 14 respectively; the racial minimums for attributes outlined in the Player’s Handbook further suggests that there is a similar or greater differential in constitution, though they have a higher minimum intelligence. Whilst in the original game all demi-humans have a 2-in-6 chance of successfully listening at a door, which is twice that of humans, in the advanced system gnomes have the best chance and dwarves no advantage at all. The Dungeon Master’s Guide also notes that gnomes have less ability than dwarves as armourers or jewellers, but greater skill in the cutting of gems, though this is of little direct consequence to player characters. Perhaps the most significant difference is hinted at in the Monster Manual, where it is suggested that some gnomes are rumoured to possess magical ability, which is fully articulated in the Player’s Handbook with the introduction of gnome illusionists. Notably this directly contradicts what Hogi says of his folk in Three Hearts and Three Lions, reinforcing again the eclectic way that Dungeons & Dragons used its sources.
Whilst gnomes were a relatively popular choice of player character race in the earliest World of Silver Blade campaigns, as with halflings, interest in them later waned sharply. Only three examples come readily to mind, and the latter two a purposeful comedic pairing of twin brothers named "Bill" and "Ben" (yes, as in the eponymous "flowerpot men"). None of these prospered long enough to have a significant impact on the campaign world or contribute to the milieu as retired non-player characters. For the most part, gnomes have been employed as comic relief by players and game master alike, from a ship full of muscle-bound Nordic pirates to a squeaky-voiced eccentric inventor. Initially there was no specific place for gnomes in the Silver Blade campaign setting, but during its resurrection and the redevelopment process it was quickly established that a number of gnome princedoms bordered on the dwarf kingdom. These were conceived of as being somewhat reminiscent of the medieval Welsh principalities, if on a larger scale. As a sort of adjunct of the mountain dwelling dwarves it seems like the gnomes have more gravitas; proud, fierce and clannish they make the wilderness of the borderland their home.
Since gnomes never appeared as a separate player character option from dwarves outside of Advanced Dungeons & Dragons, there are few contradictions to reconcile. The main difficulty lies in differentiating them from one another without defining them in terms of what they are not. Rather than seek to do so by minor variations, such as the range of infra-vision, it may be considered better to embrace the shared abilities of demi-humans as a common faerie heritage. Nevertheless, one ability evident in Three Hearts and Three Lions, but absent from gnomes in Dungeons & Dragons, is that of Hogi to track magical enemies by their scent. Giving them the tracking capability of the ranger subclass seems like a natural fit and does serve to help to set them apart from the other demi-humans. It is also quite interesting to note that as originally presented in Chain Mail the defensive advantage that gnomes and dwarves enjoyed versus ogres, trolls and giants was just as much of an disadvantage offensively, which happily argues for dropping them from consideration altogether. As with halflings, the following must be somewhat speculative on account of there not being much call for their use in play: Gnomes.