To prepare the onion mixture—heat olive oil in a large pot over medium-high heat until shimmering.
Add the onions and cook until golden brown (10 to 15 minutes). Add garlic, oregano, and red pepper flakes and cook until fragrant (about 30 seconds). Transfer half of the onion mixture to a large bowl and set aside.
To prepare the marinara sauce—Add tomato paste to the remaining onion mixture in the pot and cook for about 1 minute. Pour in the wine and cook until slightly thickened (about 2 minutes). Stir in the water and crushed tomatoes. Simmer over low heat until the sauce is no longer watery (45 to 60 minutes). Stir in the ½ cup parmesan cheese and basil.
Add salt to taste. Stir in the sugar.
To prepare the meatballs—While the sauce is simmering. Place the oven rack in the middle position and preheat the oven to 475 degrees F. Mash the bread slices and milk in the bowl with the reserved onion mixture until smooth. Add Italian sausage, 1 cup parmesan cheese, parsley, eggs, 2 garlic cloves and salt to the bowl.
Mash to combine. Add the ground chuck and knead with your hands until well combined. Form the mixture into 2 ½ inch meatballs. Place on a rimmed baking sheet and bake until well browned (about 20 minutes).
Transfer the meatballs to the pot with the sauce. Simmer for 15 minutes or until the meatballs are fully cooked (the internal temperature has reached 160 degrees F.). Serve over pasta. Note: Meatballs and marinara sauce can be frozen for up to 1 month.