How to Make It
Preheat oil in a large pot over medium-high heat.
Place 1 cup warm water in a bowl and sprinkle with yeast and granulated sugar. Allow mixture to bubble and then add egg, vanilla, cinnamon, nutmeg, salt, butter, and flour. Knead mixture until a smooth dough forms, about 7 minutes.
Place dough in a greased bowl, cover with a damp cloth, and place in a warm dry area. Let rise 30 minutes.
Punch down risen dough and roll out 1 inch thick on a floured surface. Using a small circle cutter, cut out holes and place them on a greased baking sheet. Cover with a damp cloth and let rise another 30 minutes.
Meanwhile, make the glaze: Combine milk and vanilla in a small saucepan and bring to a simmer. Remove from heat and whisk in powdered sugar until smooth. Set aside and let cool slightly.
Once oil reaches 365°F, carefully drop in doughnut holes, a few at a time, and fry on each side 4 to 5 minutes, or until golden brown. Drain on paper towels.
Dip each doughnut hole in glaze and roll in decoration of choice. Place on a cooling rack and let glaze set. Skewer each on a bamboo skewer and serve.