Put butter in a 4 1/2- to 5-qt. paella pan and set on lowest rack of oven (remove other racks). Preheat oven to 425°.
While butter melts, mix batter quickly: Put eggs in a blender or food processor and whirl on high speed for 1 minute. With motor running, gradually pour in milk, then slowly add flour; continue whirling 30 seconds. (Or, in a bowl, beat eggs until blended; gradually beat in milk, then flour.)
Remove pan from oven and pour in batter. Return pan to oven and bake until pancake is puffy and well browned, 20 to 25 minutes, depending on pan size.
Dust pancake with nutmeg if you like, then powdered sugar. Cut into wedges and serve with more powdered sugar and lemon wedges, plus a drizzle of honey if you like.