Prep the ingredients: peel the small red onion and garlic cloves; remove stems from the 1–2 fresh green chilli if using. Measure out the herbs, spices, ground rice flour, and the rest of the ingredients.
Make the meatball paste: in a food processor add 1 small red onion, 2 cloves garlic, 1–2 fresh green chilli (to taste), 2 tablespoons fresh cilantro leaves, 1 1/2 tablespoons fresh dill leaves, 2 (or more) tablespoons fresh parsley leaves, 1 teaspoon nutmeg, 1 teaspoon allspice, 1/2 teaspoon salt, 1/2 teaspoon pepper, and 2 tablespoons ground rice flour. Process until a smooth, uniform paste forms.
Combine with beef: transfer the paste to a large bowl, add 1 lb ground beef, and mix gently but thoroughly until evenly combined. Do not overwork the meat.
Shape the meatballs: form the mixture into 1-inch meatballs and place them on a baking sheet or plate in a single layer.
Heat the pan for searing: place a large sauté pan over medium-high heat and add 1 teaspoon olive oil. Heat until the oil is hot and shimmery.
Sear the meatballs: add the meatballs to the pan in a single layer without crowding. Do not move them for the first 2 minutes to allow a crust to form. After 2 minutes, gently swirl the pan and use a spatula or spoon to roll/toss the meatballs so they brown evenly on all sides. Continue searing for about 5 more minutes total (about 7 minutes total searing) until nicely browned.
Remove meatballs: transfer the seared meatballs to a clean plate and set aside.
Start the sauce: lower the heat to medium, add the remaining 1 teaspoon olive oil to the same pan, then add 1 small onion (minced), 2 cloves garlic (minced), and 2 green chilli (thinly sliced) if using. Sauté until the onion is soft and fragrant, about 3–4 minutes.
Add tomatoes and spices: add 1 cup canned crushed tomatoes, 2 bay leaves, 1/2 teaspoon nutmeg, 1/4 teaspoon salt, and 1/4 teaspoon pepper. Stir to combine, cover the pan, and cook for 5 minutes over medium heat.
Make the yogurt slurry: in a small cup combine 1/2 cup cold plain yogurt and 1 tablespoon cornstarch; stir until the cornstarch is fully dissolved into the yogurt.
Temper and add the yogurt: remove the pan lid, stir the sauce, then slowly pour the yogurt mixture into the sauce while stirring. Bring the sauce to a gentle simmer (small bubbles), stirring so the yogurt blends in smoothly.
Finish cooking the meatballs in the sauce: add the reserved meatballs back into the sauce, cover the pan, and cook over medium-low heat for about 10 minutes, or until the meatballs are cooked through.
Add fresh herbs and serve: stir in 1 1/2 tablespoons fresh cilantro, 2 more tablespoons fresh parsley, and 1 1/2 tablespoons fresh dill, toss gently to coat the meatballs, and serve immediately.