Follow these detailed instructions to create perfect cheesy scalloped potatoes every time. Each step is designed to ensure even cooking, creamy texture, and maximum flavor.

1. Preheat the Oven and Prepare the Baking Dish: Preheat your oven to 375°F (190°C). Grease a 9×13 inch baking dish with butter or cooking spray. This prevents sticking and ensures easy cleanup later. Having the oven preheated and the dish ready will streamline the process.
2. Prepare the Potatoes and Onions: Peel the potatoes and thinly slice them using a mandoline, a sharp knife, or a food processor with a slicing blade. Aim for slices that are about 1/8 inch thick. Uniformly thin slices are crucial for even cooking. Thinly slice the yellow onion as well. Set both aside. Slicing the vegetables ahead of time allows you to focus on the cheese sauce next.
3. Sauté Onions and Garlic (Optional but Recommended for Deeper Flavor): In a large skillet, melt 2 tablespoons of butter over medium heat. Add the sliced onions and cook until softened and translucent, about 5-7 minutes. Add the minced garlic and cook for another minute until fragrant, being careful not to burn the garlic. Sautéing the onions and garlic first mellows their sharpness and adds a depth of flavor to the dish. This step is optional but highly recommended for a more complex flavor profile.
4. Make the Roux for the Cheese Sauce: In the same skillet (or a separate large saucepan), melt the remaining 2 tablespoons of butter over medium heat. Once melted, whisk in the all-purpose flour and cook for 1-2 minutes, stirring constantly. This creates a roux, which is the foundation of our creamy cheese sauce. Cooking the roux briefly removes the raw flour taste.
5. Create the Creamy White Sauce: Gradually whisk in the milk, a little at a time, ensuring each addition is fully incorporated before adding more. This prevents lumps and creates a smooth sauce. Continue whisking until the sauce thickens slightly, about 3-5 minutes. The sauce should be thick enough to coat the back of a spoon.
6. Incorporate the Cheese and Seasoning: Remove the saucepan from the heat. Stir in the shredded cheddar cheese and grated Parmesan cheese, stirring until both cheeses are completely melted and the sauce is smooth and cheesy. Season with salt, black pepper, and nutmeg (if using). Taste and adjust seasonings as needed. Adding the cheese off the heat prevents it from becoming stringy.
7. Assemble the Scalloped Potatoes: Arrange a layer of potato slices in the prepared baking dish, slightly overlapping them. If you sautéed the onions and garlic, scatter half of the sautéed mixture over the potatoes. Pour about one-third of the cheese sauce evenly over the potato layer. Repeat layers of potatoes, onions (if used), and cheese sauce two more times, ending with a layer of cheese sauce on top. Ensure the potatoes are mostly submerged in the sauce.
8. Bake the Scalloped Potatoes: Cover the baking dish tightly with aluminum foil. This helps the potatoes cook through evenly and prevents the top from browning too quickly. Bake in the preheated oven for 45 minutes.
9. Uncover and Bake Until Golden Brown and Tender: Remove the foil and continue baking for another 30-45 minutes, or until the potatoes are tender when pierced with a fork and the top is golden brown and bubbly. The baking time may vary depending on your oven and the thickness of your potato slices.
10. Rest Before Serving: Let the scalloped potatoes rest for 10-15 minutes before serving. This allows the sauce to thicken slightly and the flavors to meld together. Garnish with fresh chopped parsley, if desired.