Where do Gnomes Come From?

Gnomus (lower left) in a 1555 Illustration of Mining

Word origins are a common subject of discussion in my house, and this morning we puzzled over "gnome." It sounds Greek, but I can't remember any gnomes in classical literature.

So I looked it up. Oxford has this:

Mid 17th century: from French, from modern Latin gnomus, a word used by Paracelsus as a synonym of Pygmaeus, denoting a mythical race of very small people said to inhabit parts of Ethiopia and India.

So the first use of the word gnomus is by Paracelsus (1493-1541), the famous alchemist? Interesting. As to where gnomus might come from, there are two theories: it may be related to 

gnōmē ‘thought, opinion’ (related to gignōskein ‘know’)

or to 

genomos, which could mean ‘earth-dweller’

Since some Renaissance writers used gnomus to mean a sort of earth elemental (see top), a derivation from genomos makes more sense to me.

Again via Oxford, it was a very rare word until the1910s, when its use shot up; I imagine this was about the ‘gnomes of Zurich’, who were big for a while in communist propaganda and other conspiratorial views. Then it was a rare word again until the 1960s, when there was a blip – was that more gnomes of Zurich? – then it surged in the 1980s, which was probably some combination of garden gnomes and Dungeons & Dragons.

Anyway I find it interesting that the origins of gnome trace back to Renaissance magi, vs. dwarves, who come from very old Germanic legends; I think Dungeons & Dragons preserves this distinction pretty well.