Preheat your oven to 350°F (175°C). In a large mixing bowl, combine the oats, chopped onion, evaporated milk, egg, salt, chili powder, garlic powder, and pepper. Stir until well mixed. Add the ground beef and, using your hands or a spoon, mix until all ingredients are thoroughly incorporated.

Shape the mixture into 1-inch meatballs and arrange them evenly on a greased rack set inside a shallow baking pan. Bake uncovered for 18 to 20 minutes, or until the meatballs are firm and no longer pink in the center. Remove from the oven and drain any excess fat.

While the meatballs are baking, prepare the sauce. In a medium saucepan, combine the ketchup, brown sugar, chopped onion, garlic powder, and Liquid Smoke if using. Bring the mixture to a gentle boil over medium heat, then reduce the heat and let it simmer for about 2 minutes, stirring often until slightly thickened.

Once the meatballs have baked through, pour the warm barbecue sauce over them and return the pan to the oven. Bake for an additional 10 to 12 minutes, allowing the sauce to glaze the meatballs and intensify in flavor. Serve hot, garnished with extra sauce if desired.