Preheat oven to 400 degrees F (200 degrees C). Butter a 1 quart casserole dish.
Layer 1/2 of the potatoes into bottom of the prepared casserole dish. Top with the onion slices, and add the remaining potatoes. Season with salt and pepper to taste.
In a medium-size saucepan, melt butter over medium heat. Mix in the flour and salt, and stir constantly with a whisk for one minute. Stir in milk. Cook until mixture has thickened. Stir in cheese all at once, and continue stirring until melted, about 30 to 60 seconds. Pour cheese over the potatoes, and cover the dish with aluminum foil.
Bake 1 1/2 hours in the preheated oven.
MAKE AHEAD TIP: Potatoes au gratin are always better made a day or two or three ahead, in my opinion. I never parboil or do any kind of precooking the potatoes. Mine cook for 90 minutes, so I time the initial bake for 75 minutes, or until they are just starting to brown. When they are cool enough, refrigerate them. If they are still warm, put a couple of layers of paper towels over them before putting on the plastic wrap. This way you won't get condensation all over your potatoes. Let them bake for another 30 minutes at the party locale.