In a large skillet, heat olive oil (2 tablespoons) over medium heat. Add onions (1 1/2 cups) and garlic (4 cloves) then saute until onions are translucent 7-10 minutes. Stir in Italian seasoning (3 teaspoons) and cook until fragrant, about 1 minute. Set aside and cool.
In a large bowl, add milk (3/4 cup) and bread (4 slices) and let sit for 10 minutes. Mash with a fork then stir the cooled onion mixture and combine. Add remaining ingredients and knead to combine.
Form mixture into 2 1/2 inch meatballs (you should have approximately 16 meatballs), place on a rimmed baking sheet lined with parchment paper and bake for about 20 minutes.
While meatballs are baking make the sauce. In a large pot, heat olive oil (2 tablespoons) over medium heat. Add onions (1 cup), garlic (1 tablespoon), and carrot (1/4 cup) and saute until onions are translucent for 7-10 minutes.
Stir in the remaining sauce ingredients and bring to a boil. Immediately reduce heat and simmer, stirring occasionally for 40-60 minutes. Add the oven-browned meatballs to the sauce, do not stir, and continue to simmer for 30 minutes.
Serve meatballs and sauce over cooked pasta (16 ounces), passing the extra sauce.