In a large bowl, combine onion, eggs, water, oats, mustard, salt, nutmeg, and pepper. Add ground beef and mix well.
Shape meat mixture into 16 large meatballs (about 1/3 cup each). Place shaped meatballs in a shallow baking pan. Bake, uncovered, in a 350 degree F oven for 25 minutes or until thoroughly cooked (160 degree F). Remove the meatballs, using the drippings to make Meatball Gravy. Serve the meatballs warm with gravy. Makes 8 servings.
In a heavy medium saucepan, combine meatball drippings, beef broth, mustard, nutmeg, Worcestershire sauce, and pepper, stirring until combined. Stir in cornstarch. Cook and stir until thickened and bubbly. Cook and stir for 2 minutes more. Makes 2 cups.