To cook the apples: Place butter and sugar in a large fry pan over low-medium heat. Stir to dissolve sugar. Add apple slices and cook for 8-10 minutes or until apples are lightly caramelized. Remove apples from pan and let cool completely.
To make the cupcakes: Preheat oven to 325°F Line 24 4-fl-oz-capacity muffin wells with paper liners.
Sift together flour, baking powder, cinnamon and salt. Set aside dry ingredients.
In the bowl of a stand mixer, cream butter and sugar until light and fluffy. Add eggs, one at a time, beating well after each addition. Scrape down the sides if the bowl occasionally. Beat in the vanilla and grated zest.
On low speed, add the flour mixture and mix until flour is barely incorporated. Add the milk and mix until just smooth.
Divide the batter among lined muffin wells, filling each well about 2/3 full. Top with the apples.
Bake at 325F until a cake tested comes out clean, about 15-20 minutes. Remove from pan and cool cupcakes on cooling racks. Make sure cupcakes are completely cooled before frosting.
To frost the cupcakes: In the bowl of a stand mixer, beat the butter until light and fluffy, about 3 minutes. Add the confectioner's sugar and cinnamon and beat for another 5 minutes until light and fluffy. Frost the cupcakes.