Soak the bread in the milk until soft. Squeeze out as much milk as possible and discard milk.
Add egg, herbs, cheese, flour, salt and pepper to bread. Mix until it forms a dough; it will be quite sticky. Add more flour if needed, but do not add too much, nor overwork the dough. Turn out onto a floured surface and pat into a rectangle about 1/4" thick.
Cut into squares 1/2-3/4" in size. Make a small indentation in each piece with your thumb. Spread on baking trays and set aside while making the sauce.
Drain and reserve juice from tomatoes. Crush tomatoes with your hand in a bowl.
Heat olive oil in a medium skillet. Add pancetta and saute until beginning to brown. Add garlic, onion, and red pepper flake; saute until onion softens and garlic is fragrant.
Add thyme or oregano and tomatoes; cook until tomatoes begin to brown. Deglaze with red wine and cook until wine reduces by half. Add reserved tomato juice and water; simmer until thickened. Season with salt and pepper.
Meanwhile, add dumplings to boiling salted water in batches. When they rise to the surface, cook 1 minute, then remove with a slotted spoon or spider, and transfer to a bowl. Add a little sauce and toss to coat, then prepare the next batch of dumplings.
Finish each serving with a little more sauce. Top with basil, cheese and parsley.