In a large mixing bowl, combine the ground beef, milk, seasoned bread crumbs, egg, parsley, garlic, onion, salt, pepper, and Parmesan cheese. Mix gently until just combined—be careful not to overmix, as this can lead to tough meatballs.
Using your hands, shape the mixture into meatballs about 1 to 1.5 inches in diameter. Place them on a plate or baking sheet as you work.
In a large skillet, heat the olive oil over medium heat. Once hot, add the meatballs in batches, ensuring not to overcrowd the skillet. Sear until browned on all sides, about 5-7 minutes. Remove the meatballs and set them aside.
In the same skillet, add the diced onion and sauté until translucent, about 5 minutes. Add the minced garlic and cook for an additional minute until fragrant. Pour in the tomato sauce and beef broth, stirring to combine.
Add dried basil, Italian seasoning, salt, pepper, and sugar to the sauce. Bring to a simmer, then return the meatballs to the skillet. Cover and let them simmer in the sauce for about 20-25 minutes, allowing the flavors to meld.
Meanwhile, cook the spaghetti in a large pot of boiling salted water according to the package instructions until al dente. Drain and set aside.
Once the meatballs are cooked through and the sauce is thickened, combine the spaghetti with the sauce and meatballs in the skillet. Toss gently to coat. Serve hot, garnished with fresh basil.