For the record, that is not a misspelling or deliberate typo. That's the way Baum spelled it when he included them in his Oz stories. Though curiously, it is only in Baum's Oz stories that this particular spelling is used. Baum's The Life and Adventures of Santa Claus mentions a Gnome King, and when Ruth Plumly Thompson took over the Oz series, she reverted the spelling to Gnome for her story The Gnome King of Oz.
The Nomes and their ruler, the Nome King, have been one of the most persistent threats to the people of Oz. Witches come and go, but the Nomes keep on coming. First appearing in the third book in the series, Ozma of Oz, the Nomes attempted to conquer Oz in The Emerald City of Oz. The original Nome King is deposed due to his villainy in the events of Tik-Tok of Oz, and his replacement shows that he's not much better in Rinkitink in Oz. Even without his kingdom, the Nome King still manages to stir up trouble in The Magic of Oz.
These Nomes are elemental fairies of Earth. They are extraordinary craftsmen. Some say that they are capable of not only carving and sculpting gems and precious metals, but also know the secrets of creating these materials from scratch.
Gnomes in gaming hve always been spelled with a G and seem to have given up their earthy, crafting ways to the dwarves. They're generally friendly, if zany, very unlike the wicked Nomes that Baum created.
Stay tuned tomorrow for another fun crossover between Oz and the gaming world.