Preheat the oven to 350 degrees F (180 degrees C). Gently blend ground beef, bread crumbs, egg, milk, onion, garlic, salt, and pepper until evenly combined. Form into about 40 bite-sized meatballs.

Place meatballs on a foil-lined, rimmed baking sheet; bake in the preheated oven for 20 minutes or until cooked through.

Combine chili sauce and jelly in a saucepan set over medium heat. Cook, stirring, until jelly dissolves, about 5 minutes.

Add cooked meatballs to sauce; reduce heat to medium-low and simmer for 10 minutes.