In a large bowl, combine the water and yeast.
Stir until dissolved and let it set for 3-5 minutes (it should become foamy as the yeast activates).
In a microwaveable bowl, add sugar, whole milk, salt, powdered milk, vanilla extract, and butter. Heat in the microwave for a few seconds, stirring occasionally until the butter has melted, but it's not hot enough to kill the yeast.
If the butter and milk mixture is cool enough, pour it into the yeast mixture, add eggs, and stir well.
Gently add the flour a cup at a time. Mix well with hands or a stand mixer. The dough should be sticky, but add more flour a little at a time if it's too sticky. Less flour is preferable.
Knead the dough for a minute or two. Cover loosely with a clean cloth and let rise in a warm, draft-free place for 1½-2 hours or until doubled.
Make cinnamon sugar by combining sugar, cinnamon, and nutmeg. Set aside until ready to use.
Punch the cinnamon roll dough down. Lightly flour a board or work surface, then roll the dough out into a 1-inch thick rectangle. Generously brush with melted butter. Leaving a 1-inch border on the dough, evenly sprinkle it with cinnamon sugar. Pat the cinnamon sugar gently so it sticks to the surface.
Starting with the end nearest you, roll the dough up snugly like a jelly roll around the filling, finishing the roll with the seam side down. Don't forget to pinch it so it seals together and doesn't come apart when transferring it to a baking sheet.
Slice the roll into 4 equal pieces, then slice each piece into 3 equal pieces for a total of 12 rolls.
Grease the bottom of the baking pan with butter or use a cooking spray. Place the cinnamon roll slices close together in the pan and let rise until doubled, about 45 minutes. Bake at 350℉ (180℃) for 25-30 minutes or until golden browned. Remove from the oven and let cool for about 5 minutes.