Step 1: Preheat your oven to 350°F (175°C). Grease and flour two 9-inch round cake pans or a 9x13 inch baking pan. Set aside.
Step 2: In a large bowl, combine the flour, granulated sugar, baking powder, baking soda, ground cinnamon, ground nutmeg, and salt. Whisk until well combined.
Step 3: In a separate medium bowl, whisk together the eggs, vegetable oil, and 1 teaspoon vanilla extract until smooth.
Step 4: Pour the wet ingredients into the dry ingredients. Mix with a spatula or spoon until just combined. Do not overmix.
Step 5: Gently fold in the shredded carrots, well-drained crushed pineapple, and chopped walnuts (if using) until evenly distributed.
Step 6: Divide the batter evenly between the prepared cake pans. Bake for 35-40 minutes, or until a toothpick inserted into the center comes out clean. If using a 9x13 inch pan, baking time might be slightly longer (45-55 minutes).
Step 7: Let the cakes cool in the pans for 10-15 minutes before inverting them onto a wire rack to cool completely. Ensure cakes are entirely cool before frosting.
Step 8: While the cakes cool, prepare the Cream Cheese Frosting. In a large bowl, beat the softened cream cheese and softened unsalted butter with an electric mixer until light and fluffy.
Step 9: Gradually add the powdered sugar, one cup at a time, beating well after each addition until smooth. Beat in the 2 teaspoons vanilla extract.
Step 10: If the frosting is too thick, add milk one tablespoon at a time until it reaches your desired consistency. Beat until smooth and creamy.
Step 11: Once the cakes are completely cool, frost the layers and sides with the prepared cream cheese frosting. Garnish with additional chopped walnuts or pineapple pieces if desired. Serve and enjoy!