Place the potatoes in a large pot with enough water to cover. Bring to a boil, and cook until the potatoes are soft, about 20 minutes.
Drain water, and place potatoes into a large bowl. Mash potatoes, leaving them slightly lumpy (just like making mashed potatoes).
Mix in the salt, eggs, flour, 2/3 cup of bread crumbs, and nutmeg.
Roll into walnut sized balls. If the dough is too sticky, you may want to mix in more flour or bread crumbs.
Bring a large pot of lightly salted water to a boil. Gently drop the dumplings into the water. When they come up to the surface, allow them to boil uncovered for 3 minutes.
Remove the dumplings with a slotted spoon, and keep warm.
While you are waiting for the water to boil, melt the butter in a skillet over medium heat.
Add onions and 1/4 cup of bread crumbs. Cook, stirring constantly, until the onions are tender, and the sauce has thickened some.
