01 - Preheat oven to 375°F. Generously grease a 9x13-inch baking dish with butter.
02 - Melt butter in a medium saucepan over medium heat. Add chopped onion and sauté until softened, approximately 3 minutes.
03 - Sprinkle flour over butter and onion mixture. Whisk continuously for 1-2 minutes until bubbly but not browned.
04 - Gradually pour in milk and cream while whisking. Bring to simmer and cook 3-4 minutes until thickened. Remove from heat and stir in 1½ cups cheddar and all Parmesan until smooth. Season with salt, pepper, and nutmeg.
05 - Arrange half the potato slices in prepared dish, overlapping slightly. Pour half the cheese sauce over potatoes. Repeat layers with remaining potatoes and sauce.
06 - Sprinkle remaining ½ cup cheddar evenly over top. Cover with foil and bake 40 minutes. Remove foil and continue baking 20 minutes until potatoes are tender and top is golden brown and bubbly.
07 - Allow dish to rest 10 minutes before serving to set consistency.