Preheat your oven to 425°F (220°C). If using a cast iron skillet, place it in the oven while preheating.
In a large bowl, whisk together the flour, powdered butter, baking powder, salt, and sugar (if using). Make sure everything is evenly distributed with no clumps of powdered butter. If your powdered butter has clumps, sift it through a fine-mesh strainer first.
In a separate bowl or measuring cup, combine the milk and oil. If using milk powder, whisk it into the water first, then add the oil. The liquid should be at room temperature.
Pour the liquid mixture into the dry ingredients. Using a wooden spoon or fork, gently stir until the dough just comes together. Don't overmix – you want to see some flour streaks and the dough should look slightly shaggy. If too dry, add milk one tablespoon at a time.
Turn the dough out onto a lightly floured surface. Gently pat it into a rectangle about 3/4 inch thick using your hands – don't use a rolling pin. Cut straight down with a sharp knife or biscuit cutter to make 8-10 biscuits. Don't twist the cutter as this seals edges and prevents proper rising.
Place biscuits on a lightly greased baking sheet or in the preheated cast iron skillet, leaving about 1/2 inch between each biscuit.
For the butter wash, mix 2 tablespoons powdered butter with 2 tablespoons warm water and a pinch of salt until smooth. Brush this mixture over the tops of the biscuits for extra browning and flavor.
Bake for 15-18 minutes, until the tops are golden brown and the biscuits have risen nicely. They should sound hollow when tapped on the bottom.
Serve immediately while warm. These are perfect with honey, jam, or additional reconstituted powdered butter.