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Cook the bacon: Heat a large nonstick skillet over medium. Add the bacon and cook, stirring occasionally, until browned and crisp, 6 to 7 minutes. Using a slotted spoon, transfer to a paper towel-lined plate. Keep 1-2 tablespoons of the drippings in the pan.
Brown the gnocchi: Increase the heat to medium-high. Add half of the gnocchi and cook, stirring occasionally, until browned, about 4 minutes. Transfer to a medium bowl. Repeat with remaining gnocchi.
Make the sauce: Without wiping the skillet clean, add the water, cheese, mustard, and salt; stir to melt cheese and make a smooth sauce, about 2 minutes. Stir in the peas. Cook, stirring occasionally, until the peas are warmed through, about 1 minute.
Finish and serve: Add the browned gnocchi and half (about ¼ cup) of the bacon back to the skillet. Stir to coat with the sauce. Cook, stirring constantly, until the sauce has slightly thickened, about 1 minute. Remove from heat and serve sprinkled with remaining ¼ cup bacon and chives, if using. Serve immediately. Because of the stodgy nature of gnocchi, this recipe does not save well. Enjoy it while it lasts! Love the recipe? Leave us stars and a review below!