Step 1: Prepare the Dough

1. Mix Dry Ingredients: In a large bowl, combine the all-purpose flour, granulated sugar, baking powder, and salt. Whisk together to ensure even distribution.
2. Mix Wet Ingredients: In a separate bowl, whisk together the milk, egg, melted butter, and vanilla extract until well combined.
3. Combine Mixtures: Slowly pour the wet ingredients into the dry ingredients, stirring gently with a spatula or wooden spoon until a dough forms. Be careful not to overmix; the dough should be slightly sticky and soft.

Step 2: Shape the Donut Holes

4. Prepare for Shaping: Lightly flour a clean surface and your hands. Scoop tablespoon-sized portions of dough and roll them gently between your palms to form small balls.
5. Rest the Dough Balls: Place the shaped dough balls on a floured tray and cover with a damp cloth. Allow them to rest for about 10 minutes.

Step 3: Fry the Donut Holes

6. Heat the Oil: In a deep fryer or large pot, heat vegetable oil to 350°F (175°C). Use a thermometer to maintain a consistent temperature, as this is crucial for even cooking.
7. Fry in Batches: Carefully drop a few dough balls into the hot oil, being careful not to overcrowd the pot. Fry them for about 2-3 minutes, turning occasionally, until they are golden brown and cooked through.
8. Drain and Cool: Use a slotted spoon to remove the donut holes from the oil and place them on a paper towel-lined plate to drain excess oil. Allow them to cool slightly.

Step 4: Dust with Powdered Sugar

9. Dust Them: While the donut holes are still warm, place them in a large bowl or a paper bag with powdered sugar. Toss gently to ensure they are evenly coated.