Step 1: Make the Caramel. In a small, light-colored saucepan, combine the granulated sugar and water over medium heat. Do not stir. Watch carefully as the sugar dissolves and turns from clear to pale yellow, then amber, and finally to a deep golden color. This happens quickly once color change begins. Once a deep amber, carefully and quickly pour the hot caramel into the bottoms of 6-8 cups of a non-stick muffin tin. Gently tilt to coat the bottoms. Set aside to cool and harden.
Step 2: Prepare the Flan Batter. While the caramel cools, whisk together the sweetened condensed milk, whole milk, eggs, vanilla extract, and a pinch of salt in a medium mixing bowl until the mixture is completely smooth and well combined.
Step 3: Assemble and Bake. Carefully pour the smooth custard mixture evenly over the cooled, hardened caramel in each muffin cup. Place the muffin tin inside a larger baking dish (like a roasting pan or 9x13-inch pan). Carefully pour hot (but not boiling) water into the outer dish, filling it halfway up the sides of the muffin tin (this creates a water bath). Pop the whole setup into your oven preheated to 325°F (160°C). Bake for 40-45 minutes, or until the flans look set around the edges but still have a slight gentle jiggle in the center when lightly nudged.
Step 4: Cool and Unmold. Carefully remove the muffin tin from the water bath. Let the flans cool in the pan on a wire rack for about 30 minutes. After cooling, transfer the whole muffin tin to the refrigerator and chill for at least 4 hours. This chilling time is essential for the flan to fully set and for the caramel to become liquid again on top.
Step 5: Serve. When ready to serve, run a thin knife gently around the edge of each flan cup to loosen it. Place a serving plate upside down over the muffin cup and carefully invert the muffin tin. The flan should slide out easily, with the caramel sauce cascading over the top. If one is stubborn, briefly dip the bottom of that muffin cup in warm water for just a few seconds to help loosen the caramel.