What happened to Last Whisper all of a sudden?
Okay, so here's the thing, you can't just view Gnar in isolation, you really need to consider the rest of the team. Namely, the usually Magic Damage dealing Mid Laner. See, if your team is a balanced team comp, enemy tanks and fighters need to optimize for a correct balance of both Armor and Magic Resistance. Now, as a primarily Physical Damage dealing champion, what item do you build in response to this? The Last Whisper. Now, what about your Magic Damage Dealing Hyper? Do you buy a Void Staff to make sure it continues to do damage despite the opponent's resistances? Yes? No?
Think of it like this. If Hyper was Physical Damage, this means that the moment you buy a Last Whisper, Hyper bypasses your opponent's resistances as well. What this means as a defender is that you are under a constant threat of that percent HP shred no matter what you try, because Armor is getting weakened by the Last Whisper, Health scaling Hyper goes through any Health you build, and Magic Resist is virtually useless. However, if Hyper is Magic Damage, this means that if the defender in question is building for a balanced team, they're able to bypass a good chunk of Hyper's damage even if Gnar builds the Last Whisper.
Not to mention that many champions actually have more Magic Resistance than armor at early levels, if your complaint that Hyper being Magic Damage is massively OP or something like that, you really need to take into consideration that Hyper may in fact be stronger if it actually were Physical Damage.