The Gnomes are not Everhood residents or native to the place.
Throughout the Genocide route, the player doesn't kill any gnomes despite there being hundreds of them and they do not count towards the "remaining Everhood residents" that you have to kill. The gnomes also do show up in the Afterlife Antechamber after the game ends. This could mean that they're capable of entering/exiting Everhood in some fashion. Finally, the biggest hint to this is the name of the dev team (which the gnomes represent): Foreign Gnomes. The Gnomes are past victims of Red's kill streaks
Red has gone on an unknown number of rampages until this final time. Considering the Gnomes stage at one point fills up with hundreds, if not thousands of them, they were quite busy.- This implies that Gnomes are what Lost Souls eventually become when they come as close as they can to making peace.
The Gnomes are machine elves
Machine elves are extradimensional beings reportedly encountered during DMT trips, known for their playful mischievous behavior and their tendency to act as helpful guides for those who encounter them, as well as doing visually complex things such as changing shape and creating complicated objects by singing them into existence. Similarly, the gnomes in Everhood are beings who appear to exist in both the between-spaces and outside of the physical reality of Everhood, are playful and mischievous, are implied to act as guides for the deceased, and are involved in doing visually complex things during the majority of the battles featuring them. Adding to this, there is a song by Schpongle (a music project that Everhood contains multiple references to) called A New Way To Say Hooray that samples a segment of an audiobook from Terence Mckenna where he describes the experience of encountering machine elves and at one point refers to them as "gnomes". There was another mage in the past called Gray Mage
A painting of a gray pointed hat can been seen in the Cursed Castle and in Brown Mage's home, and in Green Mage's playroom there is a straw doll wearing a gray pointed hat similar to the one in the paintings. The presence of this hat suggests that there was a Gray Mage in the past who is no longer present. Rasta Beast was Gray Mage
Rasta Beast was once part of the mages but left the group for unspecified reasons. Their friendship with Pink (who was once a mage themself), the high level of power they wield in combat and their gray color scheme hint at what they once were. The Lost Spirit in the Cursed Castle was Gray Mage
If the player has not killed anyone, the Lost Spirit who previously appeared in the Cursed Castle will reappear and talk about having been someone important and powerful in Everhood before they took their own life. The Mages are noted as being the most powerful people in Everhood in one of Brown Mage's notes, meaning someone notably important and powerful in Everhood would have been a mage. The Lost Spirit also talks about having once been close friends with Brown Mage, and the paintings of the gray hat are found in the Cursed Castle and in Brown Mage's home.