01 - Preheat oven to 375°F. Grease a 9x13-inch baking dish with butter.
02 - Melt butter in a medium saucepan over medium heat. Add chopped onion and sauté until soft, about 3 minutes.
03 - Sprinkle flour over butter and onion, whisking constantly for 1–2 minutes until bubbling but not browned.
04 - Gradually add milk and cream, whisking until smooth. Simmer until slightly thickened, 3–4 minutes. Remove from heat and stir in 1½ cups cheddar cheese and all Parmesan until melted. Season with salt, pepper, and nutmeg.
05 - Layer half the potato slices in prepared dish, overlapping slightly. Pour half the cheese sauce over potatoes. Repeat with remaining potatoes and sauce. Sprinkle remaining ½ cup cheddar cheese evenly on top.
06 - Cover with foil and bake for 40 minutes. Remove foil and bake for 20 minutes more, until potatoes are tender and top is golden brown and bubbly.
07 - Let stand for 10 minutes before serving.