Preheat the oven to 400°F. Line a baking sheet with foil and spray 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 black pepper until just mixed; avoid overworking.
Shape the mixture into 1-inch meatballs and place them on the prepared baking sheet, spaced slightly apart.
Bake the meatballs for about 20 minutes, until golden and cooked through (internal temperature 165°F).
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 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 season with salt and pepper to taste. Cover and simmer for 10 minutes over medium-low heat.
Transfer the baked meatballs into the tomato sauce, cover, and reduce heat to low to keep warm while you cook the pasta.
Cook spaghetti according to package directions until al dente. Drain, reserving a little pasta water.
Add the drained spaghetti to the skillet with the sauce and meatballs and toss to coat, adding a splash of reserved pasta water if the sauce is too thick.
Serve topped with freshly grated Parmesan and chopped parsley, if desired.