In a medium saucepan, combine chopped strawberries, granulated sugar, and water. Cook over medium heat until thickened, about 15-20 minutes.

Preheat your oven to 350°F (175°C). Prepare two 6-inch round cake pans.

In a large mixing bowl, whisk together all-purpose flour, cocoa powder, baking powder, baking soda, and salt.

In a separate bowl, whisk melted unsalted butter, granulated sugar, and brown sugar until smooth. Add eggs and milk, stirring until smooth.

Gradually add dry ingredients to wet ingredients, mixing until just combined.

Evenly divide the batter between prepared cake pans and bake for 40-45 minutes.

Cool the cakes in the pans for 10 minutes, then invert onto wire racks to cool completely.

Beat softened cream cheese, powdered sugar, and vanilla extract together. Mix in cooled strawberry jam.

Level the cooled cake layers, spread frosting and diced strawberries on the first layer, and top with the second layer.

Coat the entire cake with a thin crumb coat of frosting, then apply a thicker layer, smoothing it out. Decorate with halved strawberries.