Preheat oven to 375° Fahrenheit.
Heat cast-iron or other oven-safe skillet on stovetop over medium heat. When pan is warm, add 1 tablespoon avocado oil. Swirl or tilt skillet to distribute oil across entire surface, and continue heating skillet until oil is hot and shimmery.
When oil is hot, add sliced onion and bell peppers to skillet. Cook, stirring occasionally, until veggies are tender and softened, approximately 7 to 8 minutes. Transfer sautéed peppers and onions to large plate and set aside.
Add remaining 1 tablespoon avocado oil to skillet and swirl pan to coat. Heat pan until oil is hot and shimmery, then add chicken to skillet. Cook chicken 3 to 4 minutes, stirring once or twice, until chicken is opaque and lightly golden in spots.
While chicken cooks, add cream cheese, ½ cup shredded cheese, fajita veggies, and fajita seasoning to large mixing bowl. Stir ingredients together until well incorporated. Set bowl aside.
Add minced garlic, smoked paprika, and salt to skillet and stir to incorporate. Cook, stirring frequently, until garlic is fragrant, approximately 30 to 60 seconds.
Transfer chicken and garlic mixture to bowl with cream cheese mixture. Stir to fully incorporate ingredients, then transfer mixture into same cast-iron skillet. Spread mixture out into one even layer, covering bottom of skillet completely.
Top chicken mixture with remaining 1 cup shredded cheese, spreading cheese out into one even layer.
Place skillet in preheated oven and bake 15 to 20 minutes or until cheese is melted and bubbly and chicken is cooked through.
Carefully remove skillet from oven and set aside to rest 3 to 5 minutes. Top casserole as desired, divide into portions, and serve warm over rice, in tortillas, or as-is.