Step 1: Preheat your oven to 375°F (190°C) and line a large baking sheet with parchment paper.
Step 2: In a large mixing bowl, whisk together the all-purpose flour, baking powder, ground cinnamon, nutmeg (if using), salt, and granulated sugar until well combined.
Step 3: In a separate medium bowl, whisk together the milk, unsweetened applesauce, large egg, and vanilla extract until smooth.
Step 4: Pour the wet ingredients into the dry ingredients and stir gently with a spatula until just combined. Be careful not to overmix.
Step 5: Fold in the peeled and diced apples into the batter. Again, mix just enough to distribute the apples without overworking the batter.
Step 6: Using a large spoon or a 1.5-inch cookie scoop, drop heaping tablespoons of the fritter batter onto the prepared baking sheet, leaving about 2 inches between each fritter.
Step 7: Bake in the preheated oven for 15-18 minutes, or until the fritters are golden brown on the edges and a toothpick inserted into the center comes out clean.
Step 8: While the fritters are baking, prepare the glaze. In a small bowl, whisk together the powdered sugar, 2 tablespoons milk, and 1/2 teaspoon vanilla extract until smooth and free of lumps. Add more milk a few drops at a time if the glaze is too thick.
Step 9: Once baked, remove the fritters from the oven and let them cool on the baking sheet for a few minutes. While still warm, drizzle the prepared glaze generously over each fritter.
Step 10: Serve your delicious Baked Apple Fritters warm and enjoy!