The Gnomes were given birth by Dwarfs who were believed to be weak warriors. The Gnomes had a tough time surviving in society. Most Dwarfs kicked their Gnomish children out of the house once they were able to walk, or they would kill them once they were born.
The Gnomes banded together to survive, and set up safe havens for other Gnomes that later became schools and other areas of knowledge. The Dwarfs avoided these places because they did not like knowledge and thought it was useless in battle.
They were later proven wrong when the Dwarfs started to attack the Gnomes and burn down their schools declaring war. The Gnomish High-Mages used their magic to invade the Dwarven Capitol city and defeat the Dwarf King Moradin Bronzebeard in armed combat. They let the king live, all they wanted was peace.
The Gnomes were later that year driven out of Dwarven society by the combined forces of Gnomes and their new allies the Orcs.