In a medium bowl, combine the flour, sugar, cinnamon, baking powder, and salt. Create a well in the center of the mixture, and pour in the milk, eggs, and applesauce. Gently mix until everything is just incorporated. Carefully fold in the diced apples, ensuring they are evenly distributed throughout the batter.

In a deep skillet, Dutch oven, or deep fryer, heat about 1 1/2 inches of oil to 375°F (190°C). Once the oil is hot, drop approximately 1/4 cup of the batter into the oil for each fritter, spreading the batter slightly as you drop it. Fry each side until golden and crisp, around 2 minutes per side. Once cooked, remove the fritters using a slotted spoon and place them on paper towels to drain any excess oil.

In a separate bowl, whisk together the powdered sugar, 1/4 cup of milk, and vanilla extract to form a smooth glaze. Dunk each fritter into the glaze, ensuring both sides are fully coated. Set the fritters on a wire rack to allow the glaze to drip and set before serving.