Gather the ingredients. Preheat the oven to 400 degrees F (205 degrees C).

Mix onions, bread crumbs, Parmesan cheese, and ground beef together in a bowl. Roll mixture into even-sized meatballs, about 1 inch in diameter; place in a baking pan. Bake in the preheated oven until beef is no longer pink, 15 to 20 minutes. Reduce the oven temperature to 350 degrees F (175 degrees C).

Arrange bread cubes in a single layer in an ungreased 9x13-inch baking dish. Mix cream cheese, mayonnaise, Italian seasoning, and black pepper together until smooth. Spread this mixture over each bread cube. Sprinkle with 1/2 cup of the grated mozzarella cheese.

Mix spaghetti sauce, water (if using), and garlic together in a large bowl. Gently stir in meatballs; pour over bread and cheese mixture in the baking pan. Sprinkle remaining mozzarella cheese evenly over the top.

Bake at 350 degrees F (175 degrees C) for 30 minutes, or until heated through.