Pre-heat oven to 400 degrees. Grease a casserole dish and set aside.
Boil water in a large pot. Add gnocchi, cook according to package directions, drain and set aside.
Meanwhile, heat olive oil in a large saucepan over medium-high heat. Add the chopped onion and cook, stirring frequently, until soft and translucent (about 3 minutes). Add garlic and cook until softened. Add spinach and cook until wilted (about 3 minutes). Add 1 tablespoon tomato sauce, plus salt, pepper, basil and nutmeg. Cook 30 seconds more. Add the cherry tomatoes, tomato sauce and balsamic vinegar. Simmer for 5 minutes, stirring occasionally.
Remove from heat. Stir in milk and cooked gnocchi.Transfer half of this mixture to the greased casserole dish. Top with half of the mozzarella cheese. Add remaining mixture and top with remainder of mozzarella.
Bake for 10 minutes. If you want it to brown on top (super tasty!), broil it for a few minutes (I toasted it on the “broil” setting in my toaster oven).