Melt 1 tablespoon butter in a frying pan over low heat; cook and stir onion in melted butter until lightly browned, 5 to 8 minutes.
Mix bread crumbs, water, and half-and-half in a large bowl; let stand for about 2 minutes. Stir cooked onion, ground beef, ground pork, salt, white pepper, and sugar into bread crumb mixture until thoroughly mixed. Shape mixture into about 48 very small meatballs.
Melt 3 tablespoons butter in a skillet; add meatballs. Brown slowly, allowing about 25 minutes, until meatballs are fully cooked in the middle and no longer pink. Shake pan occasionally to cook evenly.