Preheat your oven to 350°F (175°C) and line a cupcake pan with cupcake liners. This ensures the cupcakes bake evenly and are easy to remove.

In a large mixing bowl, whisk together the flour, sugar, baking powder, baking soda, salt, and cinnamon. This helps to evenly distribute the dry ingredients.

In another bowl, cream the softened butter using an electric mixer until light and fluffy, about 2-3 minutes. This incorporates air into the butter, making the cupcakes lighter.

Add the eggs one at a time, mixing well after each addition. Then mix in the vanilla extract.

Gradually add the dry ingredients to the butter mixture, alternating with the milk. Start and end with the dry ingredients. Mix until just combined to avoid overmixing.

Fold in the diced apples gently with a spatula. This ensures the apples are evenly distributed without breaking them down.

Scoop the batter into the prepared cupcake liners, filling each about ⅔ full. This allows room for the cupcakes to rise.

Bake for 18-20 minutes, or until a toothpick inserted in the center comes out clean. This indicates that the cupcakes are fully baked.

Remove from the oven and let them cool in the pan for 5 minutes before transferring to a cooling rack to cool completely.

In a saucepan over medium heat, melt the butter. Stir in the brown sugar and heavy cream, bringing the mixture to a boil.

Once boiling, let it boil for 2 minutes without stirring. This helps to create a thick caramel base.

Remove from heat and stir in the vanilla extract. Allow the mixture to cool slightly.

In a mixing bowl, beat the cooled caramel mixture with an electric mixer while gradually adding the sifted powdered sugar. Beat until smooth and creamy.

Once the cupcakes are completely cool, frost each cupcake generously with the caramel frosting using a spatula or piping bag.

Drizzle caramel sauce over the frosted cupcakes and sprinkle with ground cinnamon and chopped pecans if desired.

Serve immediately or store in an airtight container for up to 3 days.