This is a special dish, something that would be prepared only on special occasions. Koftas came to India from Persia. Indian cuisine adapted Persia's koftas or meatballs to the vegetarian diet and various non-meat renditions were created like malai koftas, lauki koftas, cabbage koftas etc.
Malai Kofta literally means cream koftas or cream balls however they do not contain any cream at all. Instead, they are usually made with a blend of crumbled paneer or paneer bhurji and potatoes. So maybe cheese balls would be a more appropriate name. :)
The ratio of potatoes to paneer is quite important here though. Often in restaurants, they use way more potatoes than paneer which is always quite disappointing. In this recipe, the paneer truly shines and our attempt is always to use only as much potato as is needed to bind the koftas so that they don't fall apart in our smooth 'makhani' curry.
This recipe is mostly all about the koftas but the curry is luscious one too. This is exactly the same gravy that I would prepare to make paneer makhani so if you add some paneer cubes to this dish, there you have it, another very popular North Indian dish "Paneer Makhani" is ready.