Preheat the oven to 350°F (175°C). Grease a 9×13 inch baking dish with butter.
In a large skillet over medium heat, cook the breakfast sausage, breaking it apart with a spatula, until browned and cooked through, about 7-8 minutes. Remove the sausage from the skillet and drain excess fat.
In the same skillet, add the chopped yellow onion and cook over medium heat until softened and translucent, about 3-4 minutes. Remove from heat.
In a large mixing bowl, whisk together the eggs, whole milk, salt, black pepper, and dried sage until well combined.
Add the cubed bread, cooked sausage, sautéed onions, and 1 1/2 cups of shredded cheddar cheese to the egg mixture. Gently fold until all ingredients are evenly coated.
Pour the mixture into the prepared baking dish and spread evenly.
Sprinkle the remaining 1/2 cup of shredded cheddar cheese evenly over the top.
Bake in the preheated oven for 40-45 minutes, or until the casserole is set in the center and the top is golden brown.
Remove from the oven and let cool for 5 minutes before serving.