Step 1

Heat oil in large pot over medium-high heat. Add garlic, rosemary, and bay leaf; sauté until garlic is golden, about 1 minute. Sprinkle lamb with salt and pepper. Add lamb to pot; sauté until browned, about 8 minutes. Add wine; scrape up browned bits. Stir in tomatoes, 1 cup water, and 1 teaspoon salt; bring to simmer. Reduce heat, cover, and simmer until lamb is tender, adding more water if needed for saucy consistency, about 1 1/2 hours. Discard garlic. Season with more salt and pepper, if desired.

Step 2

Cook potatoes in large saucepan of boiling salted water until tender, about 20 minutes. Drain. Peel potatoes while still warm; press through food mill or potato ricer into large bowl. Place 1 1/2 cups flour in mound on work surface; mix in 3/4 teaspoon salt and nutmeg. Spoon potatoes atop flour mixture. Sprinkle with 3/4 cup additional flour; mix flour and potatoes together lightly. Pour egg atop potato-flour mixture. Knead lightly until dough is almost smooth, adding more flour by tablespoonfuls if dough is sticky, about 5 minutes (do not overwork dough).

Step 3

Line rimmed baking sheet with parchment paper; sprinkle with flour. Divide dough into 4 pieces. Roll each piece on floured surface into 3/4-inch-diameter rope; cut crosswise into 3/4-inch pieces. Working with 1 piece at a time, roll gnocchi along back of fork tines, making ridges on 1 side. Press thumb on other side, making hollow. Place on prepared sheet. (Ragù and gnocchi can be made 6 hours ahead. Cover separately and chill. Rewarm ragù before using.)

Step 4

Melt butter in large skillet over medium heat; remove from heat. Bring large pot of salted water to boil. Add half of gnocchi; cook until gnocchi are tender and rise to surface, about 5 minutes. Using slotted spoon, transfer gnocchi to melted butter; toss to coat. Repeat with remaining gnocchi. Heat gnocchi in skillet over medium-high heat, tossing until heated through. Season with salt and pepper.

Step 5

Divide gnocchi among plates. Top with hot ragù and serve.