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Step 1
Preheat the oven to 350ºF. Peel and slice the potatoes into ⅛-inch thick slices. If you're not yet confident in your knife skills, use a mandoline or food processor to slice the potatoes into thin, even pieces.
Step 2
Finely dice the yellow onion. Sauté the onion in a sauce pot with the butter until soft (about five minutes). Once soft, add the flour to the pot and continue to cook and stir for about two minutes. Finally, whisk in the milk until the flour is fully dissolved.
Step 3
Allow the milk to come up to a gentle simmer over medium heat, whisking often. Once simmering, the milk with thicken. Whisk in the chicken broth and allow it to come back to a simmer. Season the sauce with salt, pepper, and nutmeg.
Step 4
Layer half of the potatoes in the bottom of a 4 quart casserole dish. Top the potatoes with half of the white sauce and half of the shredded cheddar. Repeat with one more layer of potatoes, sauce, and shredded cheddar.
Step 5
Cover the casserole dish with foil and bake in the preheated 350ºF oven for 45 minutes. Remove the foil and continue to bake for another 30 minutes, or until the cheese is browned and bubbling on top. Let the casserole stand at room temperature for 10 minutes before serving.