I GNOME, Rise of a Wizard by M. R. Williamson

Not long after the birth of Yenwolk Stonesmith, came the Wizard Basil Alvis to the Stonesmith home.  Now, the entire town of Cutoff knew the babe was something more than just a Gnome.  As Yen grew, word traveled throughout the countryside that the wizard had sent a ‘Watcher’ to protect the lad.  Coupled with that, and the sighting of an elusive dragon near the Stonesmith home, left no doubt that normality had indeed left the village of Cutoff.