Just make Gnar's %health damage physical

And now he benefits even more from armor pen. His base damages are already really high, he'd just replace botrk with ghostblade and shred targets faster than ever.

Would be easier to make w's damage to scale by building offensive. Doesn't make too much sense to get 14% max hp chunks by building 300 armor and 2k health.

The next W plan base damage is 10/20/30/40/50 from 25/30/35/40/45 So maybe reducing max health % damage is relevant... Maybe if the target max health scaling is 7%/8%/9%/10%/11% instead of 6%/8%/10%/12%/14%...

Okay you seem to have misunderstood. The type of damage his effect does matters immensely.

If it is physical, you will naturally be tankier against it because all champions receive armor as they level. No champion that is ranged gains free MR as they level, only pure melee champs will receive it and they usually receive less point by point than they do armor. So he doesn't need magic pen because you're not going to mitigate it nearly as much as you would if it were a physical type, because building MR against him is a bad idea since most of his damage is classified as physical type.

It makes it easier to build against him when you are behind. In the event that can't happen, they should lower or remove the max health effect.
He is a ranged champ, and has plenty of methods of staying close to continously proc the effect. Champions like Vi or Elise can't trigger it nearly as often because they are melee (vi), or its a skill with a cooldown (elise).