In a large bowl, mix warm milk, yeast, and 1 tbsp sugar. Let sit 5–10 minutes until foamy.

Add flour, softened butter, and salt to the yeast mixture. Mix until combined, then smack the dough against the bowl several times to soften it. Cover and let rise in a warm place for 12 hours (or at least 2–3 hours if short on time).

Divide the risen dough into 18 equal portions and roll into balls. Place them in a greased oven dish with a little space between each. Cover and let rise 35 minutes.

Using kitchen scissors, snip each dough ball into irregular pieces. Dip each piece into melted butter, then toss in the cinnamon-sugar mixture. Arrange back in the dish.

Preheat oven to 370 °F (188 °C). Bake the bites for about 40 minutes, until puffed and golden.

While the bites bake, beat cream cheese, softened butter, milk, and powdered sugar until smooth and fluffy.

Let the baked bites cool slightly, then spread or drizzle with cream cheese frosting. Warm the caramel sauce and drizzle generously over the top. Serve warm.