Combine butter and sugar and mix thoroughly.
Add eggs one by one and beat them until they get fluffy. Also, add vanilla extract.
Add whole milk and grated apples and beat.
Shift baking powder, nutmeg, flour, salt, and cinnamon in another bowl.
Add this dry mixture to the wet mixture gradually and beat very well to smoothen the mixture.
Transfer to the eight-inch cake tin and bake in a preheated oven for 20 minutes.
Insert toothpick. When it remains clean, the cake is ready.
Add some apples to a pan and cook until soft; let them cool before using.
Beat icing sugar, butter, cinnamon, and vanilla until fluffy.
Mix cream cheese gradually and beat.
Once your frosting is ready, fill it between the cake layers and frost the cake from outside.
Drizzle caramel if you want.