1. Melt butter in 6-quart saucepan over medium-low heat. Add apples and caramelize, add water, cook, stirring occasionally for 15 to 20 minutes, or until apples are completely soft. Remove cover and add sugar, nutmeg and salt.
2. Increase heat to medium-high and continue to cook, stirring apples frequently, until liquid has completely evaporated, about 10 minutes. Remove from heat and stir in lemon zest, apple sauce and vanilla. Set aside to cool while making crust. The filling can be made one day ahead.
Making crust and assembly
1. Position oven rack in lower third of oven and preheat to 425°F. Grease 8 ceramic dishes with 1 tablespoon butter. Sprinkle sugar in dish and tilt to coat bottom and sides. Tap out excess sugar and set aside.
2. Using a bread knife, remove crusts from bread. Center the bottom of mold over one of the bread squares. Cut around mold to form circle to use as the top. Make a total of 20 of these round pieces. Ten will be for the bottom and 10 will be used for the top. Dip each one in melted butter and place at the bottom of mold.
3. Cut each of the 15 remaining slices of bread into four rectangular pieces. Dip one side of each strip in the melted butter and arrange strips, upright, around the inside of molds, buttered-sides against mold and overlapping by about 1/2” to completely line mold. Use 6 rectangles to line the mold.
4. Spoon the apple filling into bread-lined molds, mounding it slightly in center.
5. Take the remaining ten rounds of bread and dip pieces of bread into the melted butter and place on top of filling, buttered-sides up. Press down lightly.
6. Bake for 30 minutes, then cover top loosely with aluminum foil. Bake for an additional 15-20 minutes, until top is deep golden brown and side slices are golden brown (slide a thin-bladed knife between bread and pan to check). Remove from oven, uncover, and let rest for 15 minutes on wire rack. Run thin-bladed knife around edges of molds to be able to flip the mold out onto serving plates.
7. For the apple cinnamon caramel sauce, sauté 1 cup of peeled and diced Granny Smith apples in butter, add a pinch of sugar and cinnamon. Allow to cook until apples are lightly browned and all sugars have dissolved. Remove from heat and add 2 cups caramel sauce to the apples and stir to coat apples.
Pour caramel apple sauce over warmed apple cakes and serve with your favorite vanilla ice cream.