In small bowl, whisk together eggs, applesauce and vanilla until blended; set aside.
Peel and core apple, cut into 1/2-inch pieces; measure out 3/4 cup.
Place flour, sugar, salt, baking powder, and spice in bowl of food processor fitted with blade. Pulse a few times to mix.
Add cold cubed butter to processor. Pulse until the smallest butter pieces are the size of large peas.
Add egg mixture to food processor. Pulse briefly to combine.
Add baking chips and pulse briefly to mix.
Add diced apple and pulse briefly to distribute throughout dough.
Scrape the dough onto floured parchment paper and divide it in half. Gently pat and round each half into a 5" to 5 1/2" circle about 3/4" thick. Brush each round with milk or water and sprinkle with sugar/cinnamon topping.
To minimize stickiness and for easier cutting into wedges, freeze for 20 - 30 minutes.
Remove from freezer and use a knife or bench scraper and slice each round into 8 wedges.
Carefully pull the wedges away from the center to separate them just a bit; there should be about 1/2" space between them.
For best texture and highest rise, return scones to freezer for 30 minutes, uncovered. This time in the freezer relaxes the gluten in the flour, which makes the scones more tender and allows them to rise higher. It also chills the fat, which will make the scones a bit flakier. While the scones are chilling, preheat the oven to 425°F.
Bake the scones on a parchment lined baking sheet for 18 to 22 minutes, or until scones are golden brown. When you pull one away from the others, it should look baked all the way through; the edge shouldn't look wet or unbaked.
Remove the scones from the oven, and cool briefly on baking sheet. Scones are best served warm with butter and/or jam (or even apple butter) if you like.