Melt the butter in a medium saucepan over medium heat. Add the flour and stir into a paste to form a roux. Cook for a minute or two. Slowly pour in the milk and whisk until the sauce is smooth and has thickened. Stir in the nutmeg, salt and season with freshly ground black pepper to taste.
Make ahead – If you assemble and bake these scalloped potatoes ahead of time, only bake for 45 minutes. Let it cool completely and then wrap well and store in the refrigerator. Remove it from the fridge 1 hour before re-heating. Cover with foil and reheat in a 350°F oven for about 30 to 35 minutes, removing the foil the last 10 minutes of the cooking time.
To prep ahead – boil the sliced potatoes for 2 minutes to stop the oxidation process, slice the onions and make the sauce. Store the ingredients separately. Assemble the day of and bake for 45 to 50 minutes.