Very true. I could point out The Elves and the Shoemaker as another example. The "elves" in the tale are short, little people who sneak into the house at night unseen, cobble together shoes (or whatever the tale says), and then sneak away to the forest in the morning. They are said to be incredibly destructive when mistreated, or industrious and even singing when treated properly.

This kind of tale looks to be what the designers had in mind for the gnomes when they were introduced to D&D - a small, unseen people with a flair for magic, craft, and trickery in vengence. They certainly don't sound anything like the elves in D&D, which are largely a Tolkien construct. (Tolkien elves have more in common with the Irish Sidhe, complete with their unearthly beauty and their dark cousins.)