Heat 1 tablespoon of butter or oil in a large, heavy-bottomed skillet over medium heat. Add the sliced sausage and cook for about 5 to 6 minutes, turning occasionally, until each side develops a golden-brown crust. Once browned, transfer the sausage to a plate and set aside.
In the same skillet, add the remaining tablespoon of butter or oil. Add the diced potatoes and season with salt, garlic powder, smoked paprika if using, and black pepper. Stir well to coat evenly. Cook uncovered for 15 to 20 minutes, stirring occasionally. To achieve a softer interior, cover the pan during the first 10 minutes to allow the steam to tenderize the potatoes, then uncover for the remainder of the cooking time to crisp the exterior.
Add the sliced onions to the skillet and continue cooking with the potatoes for another 5 to 7 minutes, until the onions are tender and lightly caramelized.
Return the reserved sausage to the skillet. Stir well to combine and heat through for 2 to 3 minutes, allowing the flavors to blend.
Garnish with chopped fresh parsley if desired and serve the dish hot.