Meanwhile, combine eggs, milk, the 1/3 cup sugar, and vanilla. Beat until well combined but not foamy. Place custard cups in a 2-quart square baking dish. Divide egg mixture among custard cups. If desired, sprinkle with nutmeg. Place baking dish on oven rack. Pour boiling water into the baking dish around custard cups to a depth of 1 inch. Bake in the oven at 325º F for 30 to 45 minutes, or until a knife inserted near the center of each flan comes out clean.
Remove cups from water. Cool slightly on a wire rack. (Or cool completely in cups. Cover and chill until serving time.) To unmold, loosen edge of flans with a knife, slipping point between flans and side of custard cup. Invert a dessert plate over each flan; turn plate and custard cup over together. Remove cups from flans.
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