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They were originally inanimate garden gnomes, but they were given life by Grand Dad in order to fulfill the role of Toads in the bootleg kingdom he was going to grant SMG3 as thanks for freeing him.
They once again appear in SMG4: Mario Raids Area 51 but presumably died right after Area 51 exploded.
The gnomes are just ordinary garden gnomes. Nothing much to really say there, except that they sometimes carry weaponry.
The gnomes have a similar personality to Toads, being fairly hyperactive. However, gnomes are considerably more violent and aggressive than Toads, and do not seem to have the Mario-fanboyism common amongst some members of the Toad species. They are, however, fans of Peach. Combat-wise, they're about as useless as Toads, even in large groups.