His workshop is filled with Tinker Gnome Artificers, not elves. Basically he stole every good Tinker Gnome from Krynn and left the remaining inferior ones who could only make faulty inventions to breed. Forget about that whole "curse" thing, it was Santa's doing that gnomish inventions don't work perfectly.
And in the Dragonlance books we find one gnome, who despite being "cursed" invents a time machine. Well if such an invention can be made from a Tinker Gnome from an inferior gene pool, it can certainly be made by one of "Santa's Little Helpers".
So we have Element One of Santa's abilities covered: Time Travel.
His workshop is obviously on a different plane(we HAVE been the North Pole), coterminous with at least the North Pole. Giving the quantity of goods he makes, the plane must have the Flowing Time trait(as does the Far Realms) to give the Tinker Gnomes all the time they need in the universe to invent. Don't worry about them aging and dying: they'll breed and replace themselves.
So we have Element Two of Santa's abilities covered: Infinite Work Time for Helpers
Imagine if you will a spherical room on the Ethereal Plane larger than the planet Earth with the Earth at it's center. The room is on the same axis as the Earth with the same rotational speed as the Earth. Now Tinker Gnomes can reproduce any piece of existing technology. Santa had the Tinker Gnomes reproduce Spy Satellites, only with the magical twist(they are Artificers after all) of being able to scry the area in their vision at will. Thanks to the rotating nature of the room, these Spy Satellites, while stationary on the floor of the room, are in effectively geosynchronous orbit over every house and dwelling on the planet.
So we have Element Three of Santa's abilities covered: Knowing Who's been Bad or Good.
Putting it together:
Transportation of goods always takes place in the room on the Ethereal Plane. Being both invisible to people on the Material Plane and able to move through objects freely, Santa manifests on the Material Plane only to drop off presents. With Time Travel, he can effectively get the whole job done in a one night shift, using Mass Phantom Steed with an infinite caster level trick to pull his fat self around.
His bag is actually a portal to the workshop, where the Gnomes, tracking his position on the magical version of a GPS, hand him the exact presents he needs through the bag. The Gnomes are all adjacent to each other, and each with full Heward's Handy Haversacks and all have readied actions to "pass the present", so no matter how far the needed present is from the bag, it gets to Santa in one round.
Finally, delivering presents continuously while time traveling is extremely tiring and psychologically taxing on Santa, so during this time the gnomes will pass him stimulants and other drugs to keep him awake. He's only jolly because he's on drugs. Of course, coming off said drugs is dangerous and so Santa suffers withdrawal symptoms and is kept in a straight jacket for several weeks until his metabolism returns to normal and also recovers from sleep withdrawal and the psychological effects that come with it. No one said being Santa Claus was easy.
