Slice onion thinly and place in medium saucepan. Place brats on top of onion. Pour beer over onions and brats and cook covered at low heat for 1 hour. Remove brats from mixture and thinly slice. Reserve 1 cup beer and set aside. (Note: You can also save about 1/4 cup of onions if desired; just chop into small pieces.)
Preheat oven to 350°F. Heat large pot of water for macaroni. Meanwhile, brown brat slices in skillet over medium-high heat. Once browned, remove from pan and set aside. Add macaroni to boiling water and cook until al dente. Drain.
While macaroni is cooking, add butter to saucepan and cook over medium heat. Once butter is melted, whisk in flour and cook 1-2 minutes. Add reserved beer, milk, mustard, hot sauce, nutmeg, salt and pepper. Whisk this mixture until flour is blended in, then cook for roughly 5-6 minutes, until mixture starts to thicken a bit.
Once mixture starts to thicken, add in brats and onions (if using), then cheese. Reduce heat to low and continue to stir until cheese has melted.
Combine pasta with cheese mixture and pour into lightly buttered baking dish (2-quart round or 9×9-inch dish). Bake 20 minutes. Cool 3-5 minutes before serving.