Combine 1 1/2 cup flour, sugar, undissolved yeast, and salt in a large bowl. Over low heat in a small saucepan, heat evaporated milk, butter, and water until very warm (120 degrees to 130 degrees F).
Gradually stir warm milk mixture into flour mixture. Beat 2 minutes at medium speed with electric mixer, scraping bowl occasionally. Add eggs and 1/2 cup flour; beat 2 minutes at high speed, scraping bowl occasionally. With a mixing spoon, add enough flour to make a stiff dough. Cover tightly with plastic wrap; refrigerate 2 hours or overnight.
Lightly oil two baking sheets.
Remove dough from refrigerator. Punch dough down. Place on a lightly floured surface. Roll to 21- by 12-inch rectangle. Sprinkle cinnamon and nutmeg on rolled out dough. Spread Mott's Applesauce to within 1/2 inch of edges. Fold crosswise into thirds to form a 12- by 7-inch rectangle. Press edges to seal.
Cut dough into 12 (1-inch) strips. Holding ends of each strip, twist three times and pinch together ends of each twisted strip to form a wreath. Place wreaths on prepared baking sheets. Cover; let rise in warm, draft-free place until nearly doubled in size, about 30 to 45 minutes.
Preheat oven to 400 degrees F (200 degrees C).
Bake 6 minutes; then switch positions of sheets so wreaths brown evenly. Continue baking 6 to 9 more minutes or until done. Remove wreaths from baking sheets; let cool on wire racks. Frost wreaths, if desired.
Frosting: Combine confectioners' sugar, 4 teaspoons evaporated milk, and vanilla. Stir until smooth, adding another teaspoon of evaporated milk if needed for desired consistency.