Which faction poses the greatest challenge for the Dwarves?

That’s exactly the point – there are no unbeatable factions. For each, you can find a counter. Gnomes can be adequately countered by humans with a large number of cavalry units and mages with mini-arts (referring to spells). Other factions need to rush, and this isn’t an imbalance, but rather a diversity of strategies. I believe that Necropolis is a very dangerous opponent (for Gnomes) only up to the 5th or 6th week; after that, runes and the superiority in combat stats start to make a difference, and the Necromancer’s chances diminish with each passing week.