Gunnybags just means big burlap bags, like the kind you'd carry grain or potatoes in. Back in 1856, the second Vigilance committee made a fort here with walls made out of sandbags filled from a nearby beach.
This is where they'd hold their "trials" and lynch the victims.
To be fair, not all trials ended in a lynching. Most victims were sentenced to banishment and shipped out of California with a warning never to return.
That milder sentence was not always enforced. California Chief Justice David S. Terry, for instance, was sentenced to banishment for defending himself from the vigilantes, but not forced to leave town or state.
Perhaps it would have been better for Terry if his banishment had been enforced. A few years later, Terry and his wife developed a habit of armed attacks on US Supreme Justice Field. Eventually, Terry was shot by a U. S. Marshall.
Given such character and conduct of the duly appointed justices, it is perhaps not too surprising that vigilantes thought of themselves as the genuine expression of the law in San Francisco.
Indeed, anyone seeing five thousand vigilantes (some claim nine thousand, but that number seems inflated to me) gathered in orderly ranks of infantry, cavalry, and artillery would have assumed them to be an arm of the state. Their victims, in their last words, stated otherwise.