The Underpants Gnomes are a reference to an episode in the second season of South Park, in which Tweek's underpants are stolen by Gnomes in the middle of the night. When the gnomes are confronted, they explain to the boys their business plan.
Step 1 - Collect underpants
Step 2 - ?
Step 3 - Profit
The hosts will often use this in reference to plot holes steeped in circular logic.