Preheat the oven. Preheat the oven to 375°F. Spray a 9-inch by 13-inch baking dish with nonstick cooking spray.
Cook the potatoes. Place diced potatoes in a large pot of salted water. Bring to a boil and simmer for 8-10 minutes, until just barely fork-tender. Drain well and set aside.
Brown the sausage. Heat olive oil in a large skillet over medium-high heat. Add sliced smoked sausage and diced onion. Cook for 6-8 minutes, until the sausage is lightly browned and the onions are softened. Remove from the skillet.
Make a roux. Melt butter in the same skillet over medium heat. Add flour and whisk for 1 minute, until smooth.
Add the milk. Slowly pour in the milk, whisking constantly. Cook for 3-5 minutes, until the mixture begins to thicken.
Season the sauce. Reduce heat to low. Add Dijon mustard, garlic powder, smoked paprika, salt, and black pepper. Stir to combine.
Add the cheese. Remove the skillet from the heat. Stir in 2 cups of shredded cheddar cheese until melted and smooth.
Assemble the casserole. Add the drained potatoes and browned sausage mixture to the prepared baking dish. Pour the cheese sauce over everything and gently stir to combine.
Top with cheese. Sprinkle the remaining ½ cup of shredded cheddar cheese evenly over the casserole.
Bake. Bake uncovered for 25-30 minutes, until the cheese is melted, the sauce is bubbling, and the potatoes are completely tender.
Serve. Remove from the oven and let rest for 5 minutes. Garnish with fresh parsley, if desired, and serve warm.