Use the sauté function to cook the bacon in the Instant Pot. Remove the bacon to paper towels with a slotted spoon and leave about 1 to 2 tablespoons of the drippings in the pot.
Add the chopped onion to the drippings in the pot and cook, constantly stirring, until the onion is translucent. Add the garlic and cook for 1 minute longer.
Add the macaroni, water, butter, kosher salt, dry mustard, and black pepper to the pot.
Secure the lid and ensure the steam release valve is set on sealing. Choose high pressure (manual or pressure cook button) and set the timer for 3 or 4 minutes, or about half the time recommended for boiling on the package of macaroni (for al dente 7-minute macaroni and cheese, I set it for 3 minutes and 5 minute natural release). When the time is up, let the pressure come down naturally for 5 minutes and then perform a quick release following the Instant Pot instructions.
Stir in the evaporated milk and cheddar cheese. Add the bacon and chopped parsley and stir to blend.
Serve with extra chopped parsley for garnish, if desired.