Generously butter an 8x8-inch casserole dish and spread the shredded potatoes evenly inside.
In a saucepan over medium-high heat, combine milk, whipping cream, kosher salt, dry mustard, pepper, and nutmeg. Stir and heat until the mixture is nearly boiling.
Reduce heat and stir in the shredded cheddar cheese until melted and smooth.
Pour the cheese sauce evenly over the potatoes in the casserole dish. Let it cool slightly.
Dot the top with butter slices and sprinkle with paprika.
Cover tightly with plastic wrap and refrigerate for 12 hours or overnight.
When ready to bake, preheat the oven to 350°F. Remove the plastic wrap and bake uncovered for 45 minutes, or until golden and bubbly.
Notes
Refrigerate leftovers promptly and reheat in the oven until warmed through.
Leftovers can be frozen and reheated later.
Customize the cheese or add herbs (like thyme or chives) for extra flavor.