It was a gag the game company Valve put into a couple of their games. the first and main on being Half life 2: Episode 2.
you get an extra reward if you pick up a garden gnome (named Chompsky) and carry the thing to a certain point. and since when you are holding it you can't shoot or do anything except bash things with it, and since you find it near the start of the game, and that certain point is near the END of the game.... well. lets just say that gnome has become infamous.
He shows up again in Left 4 Dead 2. which means you can kill zombies with a garden gnome.