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Preheat oven to 350ºF. Beat butter in large bowl with electric mixer on medium speed until light and fluffy. Add 1/2 cup of the confectioners’ sugar, vanilla, 1/2 teaspoon of the cinnamon and nutmeg; beat until well blended. Stir in flour and walnuts.
Shape dough into 1-inch balls. Place 1 inch apart on ungreased cookie sheet.
Mix remaining 2 cups confectioners’ sugar and 1/2 teaspoon cinnamon in a medium bowl; set aside.
Bake cookies 15 minutes. Remove from baking sheets. Immediately roll hot cookies in sugar mixture. Place cookies on wire racks to cool. When cool, roll again in sugar mixture.
