Grease your ramekins or casserole and place them into an oven-safe pan. Preheat the oven to 350°F.
Melt the 1/2 cup of sugar in a small pan over low heat, stirring until it turns brown. Pour a little into each cup and swirl the cups around so it coats the entire bottom.
Beat slightly the eggs, 1/3 cup sugar and salt.
In a medium saucepan, heat the 2 cups of milk and nutmeg until a film forms on top (this is scalding the milk). Slowly pour the heated milk into the egg mixture, stirring constantly so the eggs don't become scrambled. Stir in the vanilla.
Pour the egg custard mixture over the caramelized sugar in the ramekins. Pour hot water into the oven-proof pan on the outside of the ramekins, so it comes up the sides about 1". This will help steam the custard.
Bake at 350°F for 30 to 35 minutes or until a knife inserted in the center comes out clean. Remove the ramekins from the hot water.
Serve warm or cold. To unmold, run a knife along the inside edge of the ramekin. Place a plate over the top of the ramekin, and firmly holding both in your hands, flip them over so the plate is on the bottom and the custard should slip out.
You will need six 4-ounce custard cups (ramekins) or a 1 1/2-quart casserole dish.