In a small bowl, stir together the warm water, ½ teaspoon of sugar, and the active dry yeast. Let it sit for 10 minutes or until frothy and activated.

In a separate bowl, whisk together the warm milk, melted butter, sugar, egg, vanilla, and salt until combined. Whisk in the activated yeast mixture.

Add in about 2 ½ cups of flour and mix until the dough begins to form. Turn out onto a lightly floured countertop and knead, adding a little bit of flour at a time just until the dough is still tacky but no longer sticking to your hands when you knead it. Knead for 3-5 minutes or until the dough is soft and smooth and a finger imprinted into the dough bounces back. Place in a bowl, cover, and let rise for 1 hour or until the dough is doubled in size.

Punch down the dough and transfer to a lightly floured countertop. Stretch out with your hands or roll out using a rolling pin into a large rectangle about 12"x 20". Top half of the dough with the chopped peaches, then sprinkle the cinnamon and nutmeg over the peaches. Lastly, sprinkle about 1 tablespoon of flour over everything.

Fold the empty half of the dough over the filling and then cut the layered dough into pieces around 1"X1". Take a few pieces of the layered dough and form them into fritters. Press and fold them together, nestling the fruit inside as best as you can. Add flour to help them stick together if the peaches are really juicy. They will not be perfect, but don't need to be! Don't be afraid of them falling apart while frying; they do (quite miraculously) stay together!

Place the fritters on a parchment paper-lined baking sheet that has been sprinkled with a little bit of flour. Let rest and rise for 15-30 minutes while you make the glaze and heat the oil to 350℉ (at least 4 inches deep in a high-temperature safe Dutch oven or heavy pot).

To make the glaze, bring the milk, butter, white sugar, and salt to a rolling boil for 2 minutes while whisking. Remove from the heat and whisk in the powdered sugar and vanilla until smooth.

Fry the risen fritters in the heated oil, maintaining a 350℉ temperature as best as you can. Fry on each side until dark brown in color. Remove from the oil and let sit on a paper towel-lined plate for a few minutes before transferring to a wire rack to cool slightly.

Dunk the slightly cooled fritters in the warm glaze, being careful not to burn your fingers (use a utensil), and place on a wire rack for excess glaze to drip off.