In a large skillet, cook bacon over medium heat until crisp, about 8 to 10 minutes. Transfer to a paper towel, let cool, and crumble. Reserve about a third of the crumbles for topping.

Slice the potatoes into ⅛- to ¼-inch thick rounds, leaving the skins on. Soak in cool water while prepping, then drain and dry well.

In a large bowl, stir together sour cream, cream cheese, 1½ cups cheddar, milk, garlic, salt, pepper, and the larger portion of bacon crumbles until smooth.

Grease a 9x13 inch baking dish. Layer half the potato slices, half the sauce, then the remaining potatoes and sauce. Top with the reserved ½ cup cheddar.

Preheat oven to 375°F (190°C). Cover tightly with foil and bake 45 minutes. Uncover and bake 15 to 20 minutes more, until potatoes are fork-tender and top is golden. Let rest 10 minutes before serving.

Sprinkle the reserved bacon crumbles and chopped chives over the casserole. Serve warm.