In an effort to end the repeated posts regarding Game Masters, I offer all that I know about them, which is a lot. I can guarantee that all of this information is 100% accurate as of July 2007.
The Basics:
Game Masters are all employed by Blizzard. There are no "freelance" GMs who help when they feel like it and play the rest of the time.
No GM works from home. They all report to Blizzard's offices, and work an 8 - 10 hour shift, depending on the current concurrency of users, the amount of tickets in queue and the severity of any current active problems in the game.
Game Masters work on all servers except the servers which they play on in their personal time.
Game Masters all have separate accounts for work, and they have three characters on every server. One Horde character, one Alliance character and one character which is used to speak to the players through their special tool (More on the tool later).
Game Masters work on teams of 8-10 GMs with one Senior GM in charge. There are currently 300 - 600 GMs employed by Blizz, and more being hired every day.
GM types and explanations:
There are four kinds of GMs. Regular GMs, Specialist GMs, Senior GMs, and Lead GMs.
Regular GMs speak with players and attempt to resolve their issues, such as quest problems, problems with other players, lost or accidentally sold items, issues with the player's UI, and basic game info.
Specialist GMs are the ones who investigate scams and hacked accounts. They are also sometimes able to swap one quest reward for another, provided the requirements are correct.
Senior GMs deal with irate players and provide leadership and guidance for the GMs under them.
Lead GMs deal with paperwork, paychecks, policies, and they spend a lot of time while on the clock playing WoW.
There is also a sub-type of regular GM who has additional powers and responsibilities, called Point GM, and there is one Point per team.
GM Powers:
Game Masters have a variety of powers depending on their position.
While In-Game regular GMs are able increase their movement speed, fly, fly through walls and the environment, despawn mobs and NPCs, become invisible and invincible, recharge health and mana to full instantly, resurrect players, become any level at will, port to any location, and summon players and player corpses to any location.
While using their special tool they can find any character on any realm; speak with any player on any realm, view a multitude of character stats on the character which they are speaking to such as name, guild, guild rank, arena teams and rank, honor, Class, Race, Level, Sex, Gold, pets if the character is a warlock or hunter, all inventory items (equipped, in bags, in mail, and in bank), mail currently in the character's inbox, mail the character has sent which is still in the inbox of the addressee; they can also view a list of inventory items that have been deleted/used/sold recently, and restore items in this list.*
Regular GMs are also able to search all text said through any chat channel, and if chat that is in violation of the harassment policy is reported, they will take action against the offending account which can include a warning, a three hour suspension, a three day suspension, or if there have been enough prior infractions on the account, they can submit the account for a final review which usually will result in a permanent ban of the account.
Regular GMs CANNOT do the following: Create items or gold. Summon mobs or NPCs into existence.
*A note on restoration of items: Regular GMs can only restore items which are currently in the deleted inventory list of the character. The length of time that items will stay in the deleted inventory varies, based on the quality of the item. Grey, White and Green items will only stay in the deleted inventory until the next maintenance. Blue items will stay for 2 weeks to a month. Epic and Legendary items will stay for 2 to 3 months. The policy on restoring items is that they are allowed to be restored if they have been deleted within the last 24 hours, but most GMs don't really check and they just go ahead and restore it if they can find it.
Specialist GMs have all the powers of regular GMs and they are able to create items and gold out of the blue, but are only permitted to do so in the course of an investigation, and only the exact items and gold that they are able to verify were lost. There is a difference in how Regular and Specialist GMs restore items. Regular GMs pull the items out of the deleted inventory, and specialist GMs actually create brand new items to replace the ones that were lost. Game Masters are not able to view what enchants or socketed gems you may have on your armor or weapons, and as such, when a specialist creates a new item to replace a lost one, they are not able to provide the enchant or gem.
GM Island:
There has always been quite a bit of controversy regarding GM Island, and now I offer you all the truth.
GM Island is not instanced, and it is actually used by GMs every day. The only thing that it is used for is for GMs to stand there. In order for GMs to speak to players using their special tool, their account needs to be logged in to the game. When they log in using their tool, the character that is used to speak with players is logged in, and all of these characters are located on GM Island. Just about all of these characters are level 1, with their class and race varying depending on the preference of the GM who uses them. Sometimes, due to various server issues, these characters will become unflagged as a GM, lose their GM tag and powers, but because the GM is not actively viewing the character but is instead using the character through their tool, they do not notice that they no longer have their tag and are visible to anyone who /who's GM Island. This is the main cause of people seeing players on GM Island.
GM Island itself is rather boring. It's a little, green island, with some trees, a graveyard, a dock with a rowboat, and a multiple story building, human in design, with some tables, chairs and random wall adornments, and a bell tower on top. Also, every GM who is currently logged into the realm is standing on the island, invisible. Most of them are standing in the exact same location, just in front of the door to the building. A few other popular locations for GMs to stand is on the hill just a little ways off from the building, in the building, on the rowboat, on the lamps by the dock, and on the roof of the building.
Also, under GM Island is a room. The room with the chair. Four walls, equal in length, its maybe three or four times tall as it is long, with a large chair in the middle. The room and the chair are textured in a gray and black grid, each grid box is about as tall as a human. What is it used for? No idea.
When people refer to the rows of herbs, mining nodes, vendors and the like on GM Island, they are 100% wrong about it's existence there. As far as I know, those things actually exist in a place called Programmer Isle. Programmer Isle IS actually instanced, and aside from knowing it's exact instance number and worldport location and being able to port there, there is no way to get there.
More general info regarding GMs that I'm not sure where to put it:
On special occasions, GMs are allowed to reveal themselves to you. They can become visible to everyone, or reveal themselves to just you. This happened the xmas before last, and GMs were allowed to go in-game, turn into one of Greatfather Winter's helpers, and reveal themselves to the player that they were currently assisting. More recently, Senior GMs have been given the go-ahead to appear in-game to all players and mess around with them in some fashion.
Any questions, feel free to ask. I'm happy to share what I know. I'll answer anything you want to know about GMs, policies, or Blizzard in general.