Grate the parmesan cheese (grate the two cups needed, and divide it in half). Grate the mozzarella if you didn't buy an already shredded variety.
Preheat oven to 375F and move the rack to the top third of the oven. Line a baking sheet with tin foil.
Prepare the meatballs by adding all the meatball ingredients to a large bowl and gently mixing it with your hands and forming it into 2" meatballs. I made 18 meatballs. Place the meatballs on the baking sheet and bake them for 20 minutes.
Meanwhile, make the sauce in a deep, oven-proof skillet. Chop the onion and then sauté it in the oil for about 5 minutes on medium-high heat. Add the remaining sauce ingredients and simmer for another 5 minutes.
Take the meatballs out of the oven and add them to the skillet in an even layer. Place the skillet in the oven for 20 minutes to ensure the meatballs are cooked through and that the sauce thickens a bit more.
Remove the skillet from the oven and sprinkle the mozzarella and parmesan cheeses over top. Place it back in the oven for another 10 minutes. If desired, broil for an additional few minutes to brown the cheese.
Serve immediately with pasta, bread, a salad, or devour the meatballs by themselves.