If using fresh pearl onions, bring a pot of water to boil. Score an X at the root end of each onion and blanch them for 30 seconds. Transfer to an ice bath, then slip off the skins. If using frozen pearl onions, simply thaw according to package instructions.
In a medium saucepan, bring 2 cups of lightly salted water to a boil. Add the pearl onions and cook for 2 minutes if using fresh (skip for pre-cooked frozen onions). Add the peas and cook until tender but still bright green, about 3-4 minutes for fresh or 2 minutes for frozen. Drain thoroughly and set aside.
In the same saucepan, melt the butter over medium heat. Sprinkle in the flour and whisk constantly for 1-2 minutes until it forms a smooth, blonde roux.
Gradually whisk in the milk and cream, ensuring each addition is fully incorporated before adding more to prevent lumps.
Add the sugar, salt, white pepper, and nutmeg (if using) to the sauce. Bring to a gentle simmer, stirring frequently, and cook until the sauce thickens enough to coat the back of a spoon, typically 3-5 minutes.
Gently fold the cooked peas and pearl onions into the cream sauce, coating them evenly. Allow the mixture to simmer for 1-2 minutes, letting the vegetables absorb some of the sauce's flavor.
Taste and adjust seasoning if necessary. Garnish with fresh parsley just before serving.