Bring eggs and milk to room temperature. Set them on the counter at least 30 minutes ahead, or warm whole eggs in a bowl of warm water for 5–10 minutes. This is the single most important step for a properly puffed Dutch baby.
Make the batter. Add eggs, milk, flour, sugar, vanilla, and salt to a blender. Blend for 30–45 seconds until completely smooth. (Or whisk vigorously in a bowl until lump-free.)
Rest the batter for 5–10 minutes while you preheat the air fryer.
Preheat the air fryer with the pan inside. Place a small (6–8 inch) cast iron skillet or air-fryer-safe oven-proof pan in the air fryer basket. Preheat at 375°F for 5 minutes.
Add the butter. Carefully remove the hot pan with oven mitts. Drop in the butter and swirl until melted and coating the bottom and sides of the pan.
Pour in the batter. Pour the rested batter directly into the hot, buttery pan. Return immediately to the air fryer.
Cook at 350°F for 10–12 minutes, until the Dutch baby is deeply golden brown and puffed up the sides of the pan. Do not open the air fryer during cooking — opening it can cause the pancake to deflate.
Serve immediately. Dust with powdered sugar, squeeze fresh lemon juice over the top, and add your favorite toppings. Dutch babies begin to deflate within a minute or two of coming out — this is normal!