Preheat the oven to 400°F. Line a baking sheet with foil and coat lightly with cooking spray.
In a large bowl, combine the ground chicken, egg, Panko, grated Parmesan, Italian seasoning, 1/2 teaspoon kosher salt, and 1/4 teaspoon pepper; mix gently until just combined.
Roll the mixture into 1-inch meatballs and place them on the prepared baking sheet, evenly spaced.
Bake the meatballs for about 20 minutes, until golden and cooked through.
While the meatballs bake, heat 2 tablespoons olive oil in a large skillet over medium heat. Add the chopped onion and sauté until softened and lightly golden, about 5–7 minutes.
Add the minced garlic and crushed red pepper flakes (if using) and cook until fragrant, about 30 seconds.
Stir in the crushed tomatoes, 1 tablespoon butter, and salt and pepper to taste. Cover and simmer for 10 minutes to meld flavors.
Transfer the baked meatballs into the tomato sauce, cover, reduce heat to low, and warm for a few minutes to combine.
Cook spaghetti according to package directions, drain, and add to the skillet with the sauce and meatballs. Toss to coat, adding reserved pasta water a splash at a time if the sauce seems dry.
Serve topped with freshly grated Parmesan and chopped parsley, if desired.