Loot the bodies of the defeated gnomes. Change out of your pyjamas and chase them into the mouse hole. Continue to the left but be careful of the mouse trap since it can kill you instantly. Climb up the stapled wires to reach the item container on the pipe.
Head to the left this time and smash the piece of pipe. Now shoot the the broken part of the wire to electrocute and startle the rat which will prompt it to run towards the mouse trap. Loot the body then continue to the left. Watch the next scene.
Exit to the left then climb the wire. Smash the division on the left and run past the fuses to loot the item bag on the far left.
Next, continue to the right and shoot the pipe above to create a walkway for you. You can't go past the hole since there are three rats there. First, climb the wires again then shoot the wooden division above to make a piece of insulation fall and ignite with the help of the live wire. You can now use your fart to blow the pesky rat by the hole.
While on the pipe, you can also destroy the wooden division to the right and destroy the cracked part of the pipe to kill the rat below. Now you only have one rat to worry about. Use your fart or ranged weapon to stun it then engage it to battle.
After defeating it, climb the stapled wire to the right and interact with the power outlet to exit the walls. Continue to the right to confront the gnomes and engage them to battle.
After the battle, continue to the right and go down using the wire. After the scene, you'll have to fight the warlock. Like the other bosses, you'll have to rely on status ailments to deal real damage.
At certain times during the battle, your dad's balls will come crashing down and you have to press the correct button to avoid getting smashed.
Once the warlock is defeated, you'll get the Gnome Dust tool that will allow you to shrink to gnome size or return to normal. You can also talk to the gnome outside the mouse hole to get a new side quest.
You can now add your dad to your friends list once you have a lot of friends.