For the Pancake Batter
In a medium mixing bowl, mix flour, sugar, baking powder, and salt. Make a well in the center. In a small mixing bowl, whisk milk, egg, melted butter, and vanilla. Whisk wet ingredients into dry ingredients until smooth. Set aside.
For The Apple Mixture
In a medium bowl, toss together the apples, sugar, cinnamon, nutmeg and lemon juice. Melt butter in a large skillet over medium high heat. Add apple mixture and saute 2 minutes, stirring often. Pour in the water and reduce heat. Cover, and allow to cook for 5 minutes. Uncover , raise heat, and cook until all liquid has boiled away. Transfer apple mixture to a small plate.
Heat skillet coated with cooking spray (or butter) over medium high heat. Pour a layer of pancake batter; let it set. Arrange a quarter of the apple slice over batter and add another layer of batter. Keep over heat until bottom has cooked. Flip pancake (this can be tricky) . when bottom layer has cooked; transfer pancake. Repeat with remaining batter and apple mixture. Serve warm with sifted sugar, sweetened sour cream, or maple syrup.