Process onion and garlic in food processor until finely chopped. Heat olive oil in 8-inch skillet over medium heat and cook onion mixture, stirring occasionally, 5 minutes or until onion is translucent. Remove from heat and let cool completely.
Combine onion mixture with remaining ingredients except Mozzarella cheese and sauce in large bowl; shape into 20 (2-in.) meatballs.
Arrange meatballs in 13 x 9-inch baking dish. Bake 25 minutes; pour sauce over meatballs, then sprinkle with cheese. Bake an additional 10 minutes or until meatballs are thoroughly cooked. Remove from oven and let stand 5 minutes before serving