Preheat the oven or grill to 350 degrees Fahrenheit. Line a baking sheet with parchment paper for easy cleanup.
Melt 1 tablespoon unsalted butter in a medium skillet over medium heat. Cook 1 small diced onion until fragrant and slightly brown while stirring occasionally, about 3-5 minutes. Reduce the heat to low and add 2 cloves minced garlic. Cook for 2-3 minutes. Remove from heat and set aside to cool.
In a large bowl, combine 1 ⅓ pounds ground beef, 1 large egg, ½ cup panko bread crumbs, ½ cup milk, 1 tablespoon Worcestershire sauce, ½ teaspoon thyme, and 1 teaspoon kosher salt. Use your hands to mix well, but try not to overwork the meat. Shape into 2 inch-sized balls on a parchment-lined baking sheet.
Bake uncovered in the preheated oven for 20 minutes.
While the meatballs are cooking, combine ¾ cup ketchup, 1 ½ tablespoons brown sugar, and 1 ½ tablespoons spicy brown mustard in a bowl. Whisk until combined and set aside.
After 20 minutes of cooking, dip each meatball in the ketchup mixture, return to the baking sheet, and continue baking for about 10 additional minutes. Serve warm with toothpicks for easy eating. It can be kept warm in the slow cooker, if needed.