Combine the ground beef, breadcrumbs, milk, egg, diced onion, minced garlic, Worcestershire sauce, salt, and pepper in a large bowl. Mix well using your hands until all ingredients are evenly distributed.

Shape the meat mixture into 20 meatballs, each about 1 ½ tablespoons.

Heat 1 tablespoon of the butter in a large skillet over medium heat.

Add the meatballs and cook, turning occasionally, until browned on all sides and cooked through, about 10-12 minutes. Remove the meatballs from the skillet and set aside.

In the same skillet, add the remaining 1 tablespoon of butter.

Add the sliced mushrooms and sliced onion, and cook until the mushrooms release their moisture and the onion is softened, about 5-7 minutes.

Add the minced garlic to the skillet and cook, stirring the entire time, for 30 seconds.

Sprinkle the flour over the mushroom mixture and stir to combine.

Cook, stirring constantly, for 1-2 minutes to remove the raw flour taste.

Gradually whisk in the beef broth.

Add the Worcestershire sauce, mustard powder, and dried thyme.

Bring the mixture to a simmer, stirring occasionally, until the gravy has thickened, about 5-7 minutes.

Season the gravy with salt and pepper to taste.

Return the meatballs to the skillet with the mushroom gravy, and simmer for 5 minutes to allow the flavors to blend.