Wash and dry apples. Insert wooden twig or craft stick into stem of apples; set aside.
Combine caramels and water in a heavy saucepan. Cook over low heat, stirring constantly until caramels melt. Remove caramel mixture from heat.
Dip apples in caramel mixture, covering apples completely. (Spoon caramel mixture over bare spots, if necessary.) Scrape excess caramel from bottoms of apples; roll bottoms in chopped peanuts, white chocolate morsels, or assorted candies. Decorate craft sticks with ribbon, if desired. Place apples on wax paper coated with cooking spray. Store in refrigerator. Let stand at room temperature 15 minutes before serving to allow caramel to soften.