Preheat the oven to grill setting at 250°C (482°F).
Heat 2 tablespoons of butter in a coated pan over medium-high heat. Add the gnocchi and fry for about 8-10 minutes until golden brown. Season with salt, pepper, and nutmeg. Transfer to a flat baking dish and coarsely grate the Appenzeller cheese over it.
Bake for 3-5 minutes until the cheese has melted. Arrange the bacon slices on top and bake for another 2-3 minutes until the bacon is heated through.
Cut the chives into pieces and sprinkle over the finished gnocchi before serving.