Thinly slice onions and add to an oven proof skillet. Add the butter, salt and pepper to the onions and cook on the pellet smoker at 350F for 30 minutes.
Stir the onions and cook an additional 30 minutes or until the onions are completely softened and golden brown.
Add the cream cheese and cubed cheddar to the pan and lower temperature to 185F. Cook for 20 minutes.
Stir in the sour cream, Parmesan, vinegar and chives. Cook an additional 15-20 minutes until heated through.