In a Dutch oven or large, heavy-bottomed saucepan heat 2 tablespoons olive oil over medium-low heat and add the onions and garlic with a dash or two of salt and pepper.
Cook, stirring often, until softened about 10 minutes.
Add the bay leaf and tomato paste, stir it into the onions and cook a minute or two.
Stir in the crushed tomatoes, ½ cup water, Italian seasoning, parsley, salt, pepper and sugar.
Turn the heat up and bring to a simmer.
Nestle the meatballs into the sauce. Simmer 25 - 30 minutes, stirring often.
Taste and season the sauce with more salt and pepper or Italian seasoning if needed.
Remove the bay leaf and discard before serving.
Serve over spaghetti or your favorite pasta.