Pour the warm water into the bowl of your stand mixer (I like to make the water a little bit warmer than bath water, so that when the bowl cools it slightly, it will still be warm enough to activate the yeast). Sprinkle the yeast evenly over the water. Drizzle the honey over the yeast. Let rest for 5-10 minutes until yeast is very foamy.
Add the flour, dry milk, and salt to the bowl. Knead with the dough hook on a low speed. Once the dough starts to form, allow the hook to continue to knead for another 5-6 minutes until the dough is elastic and no longer sticky.
Cover the bowl and let dough rise until doubled in size. Punch down the dough and move it to a floured workspace like the kitchen table. Roll out the dough to about 1/4 inch thickness.
Cut out the doughnuts, and be sure to cut a small hole in the middle (this prevents the center of the doughnut from being undercooked, so don't skip it!).
Cover and let the dough rise once more for about 10 minutes. Meanwhile, prepare the oil. You need about 2 inches of oil in a pot. I just used a small 2 quart saucepan, and I was able to fry 2 doughnuts at a time. If you want to fry more doughnuts at a time, simply use a bigger pot with more oil. 4 cups of oil worked perfectly for me. Heat the oil over medium-high heat. It's ready when water droplets make it slightly sizzle.
Gently place each doughnut in the oil. Once you see brown begin to creep up the side of the doughnuts, flip them (this should happen pretty quickly, it won't take more than a minute, especially as the oil continues to get hotter).
Remove the doughnuts to a wire rack over paper towels to let dry and cool slightly.
Whisk together the powdered sugar and milk. Add 1-2 tablespoons of additional milk if the glaze is too thick for dipping.
Thoroughly dip each doughnut in the glaze, top and bottom. Place back on the wire rack to allow excess glaze to drip off.
My instructions are for use with a stand mixer. If you do not own a stand mixer, you can still mix and knead the dough by hand without a problem.