I've noticed as of today's update, Mushgnomes can't be attacked with Lag compensation active, However, without lag compensation the game seems to go into ice physics, making gameplay more or less impossible.
EDIT: With Lag compensation off, the character goes into auto-attack mode and never stops swinging their weapon (including ranged weapons such as blowdarts, consuming a full stack in a very short time).
1. Locate a Mushgnome in the Lunar Cave biome.
2. Click to attack it.