The World of Aeternum
Gnomes were once part of the Fay, a magical realm inhabited by the Fayerye. Before the cataclysm the magical border separating the Fay and Aramaya was almost non-existent, and Fayerye-folk traveled to and from both worlds with ease.
The Gnomes were a race of Fayerye that found themselves more at home in Aramaya then in the Fay and decided to settle down. When the sky fell and the Great Old One arrived the magical border closed tight, sundering the connection between Fay and Aramaya and left the Gnomes stranded in a new world.