Steam potatoes until tender, about 15 minutes. Transfer to large bowl. Cool slightly, about 10 minutes, then mash until smooth. Mix in next 4 ingredients. Add yolk; mix until blended. Gradually mix in 1 cup flour. Knead until blended and smooth, adding more flour by tablespoonfuls if very moist, about 2 minutes.
Line rimmed baking sheet with parchment. Divide dough into 4 equal pieces. Roll 1 piece on lightly floured surface into 24 inch-long rope. Cut rope into 1-inch pieces. Holding gnocchi in palm, roll whisk over each to form indentations. Transfer gnocchi to prepared baking sheet. Repeat with remaining dough.
Cook 8 tablespoons butter in medium skillet over medium-high heat until butter begins to brown, about 4 minutes. Add sage and lemon peel. Season with salt and pepper; set sauce aside.
Meanwhile, melt remaining 2 tablespoons butter in large skillet; set aside. Working in 2 batches, cook gnocchi in large pot of boiling salted water until they float to the surface, then cook 1 minute longer. Using slotted spoon, transfer gnocchi to skillet with unseasoned melted butter. Saute all gnocchi over medium-low heat until beginning to brown, stirring occasionally, about 5 minutes.
DO AHEAD: Gnocchi and sage brown butter sauce can be made 2 hours ahead. Let stand at room temperature.
Pour sage brown butter sauce over gnocchi; toss to coat and warm through, about 1 minute. Divide equally among bowls and serve.
Note: These gnocchi are also delicious with a creamy Gorgonzola cheese sauce. Stir 1 cup cream and 2 ounces crumbled Gorgonzola in a medium saucepan until smooth. Add cooked browned gnocchi and toss to warm through.