The tents are for the Sligs, yes. They have to sleep somewhere when they're not working or being trained in the Barracks. As for the gas, it could just be laughing gas, or just general pollution, but I'd wager Oddsville is right in saying it's something much ickier.
EDIT: By the way, small questions like these should go in the latest Oddworld Questions and Answers topic.
EDIT: Darn double posting fail safe, I'm not sure this'll be bumped up. Anyway, I just checked out Dear Alf and came across this...
:
Q: What is that green gas in the background of the SligBarracks?
Alf: And you thought Abe had bad gas.
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EDIT: Dammit, why isn't this quote working?
EDIT AGAIN: Work, darn you!
EDIT: Ah, there we go.
