The gnomes are a subrace of Humans. Through a series of mutations caused by both radiation and prolonged melange use, these humans have had their growth extremely stunted and their minds gifted with unbelievable intelligence, at the cost of serious mental instability. Indeed, few gnomes live past the age of 30; sooner or later (usually sooner), a gnome will snap and go into a killing spree, or a gnome’s latest invention backfires catastrophically. Because of this, gnomes tend to have a very low population density. They are feared (or at best, treated with extreme caution) by the other subraces (Orcs in particular harbor very superstitious beliefs about the gnomes).
The gnomes are spread all over the world, and are not concentrated in any one spot. Most other races avoid them, but enterprising individuals sometimes try to convince gnomish inventors to work for them, which is quite a risk to take.
Gnomish technology is very powerful and advanced (approximately at a late 19th/early 20th century level, minus firearms), but is the most unreliable stuff you could imagine. Gnomes have created wondrous devices such as steam engines, basic light bulbs, and even Tesla coils. However, gnomish devices all have their hazards: for example, steam engines can become overpressured and explode, light bulbs sometimes burn very hot and combust, and Tesla coils have the tendency to shock the wrong person at the wrong time.