Paint one of the largest wooden balls red and the other ball gray; let dry. Brush varnish onto each ball; let dry.
Glue the flat side of each painted ball to a wooden disk. Glue the flat side of each 1-inch-diameter ball to top of a painted ball for head.
Cut three narrow strips of faux fur. Use a small amount of glue to attach an end of a strip about halfway down each side of the red gnome head for pigtails. Leave bottoms of pigtails loose. Tie a red crochet thread bow around each pigtail. Glue the third faux fur strip to the gray gnome head for a beard.
Glue a 3/8-inch-diameter wooden ball to each gnome for a nose, placing it in the crevice between the body and the head.
Trace the patterns (below) onto white paper and cut out. Cut the red gnome's hat from gray felt and the gray gnome's hat from red felt. Using matching thread, whipstitch the long edges of each hat together to form a cone. Sew a bell to the tip of each hat. Blanket-stitch the bottom edge of the gray hat with crochet thread. Place a dab of glue on each side of both heads and attach the hats.
Using needle-nose pliers, shape the steel wire into two circles joined by a short, straight piece to form glasses. Cut off excess wire. Place glasses on the gray gnome's nose, bending the straight piece to fit over the nose.