In a large bowl, mix the peanut butter, milk, and applesauce together until smooth.
In a separate smaller bowl, stir together the flour and baking powder.
Add the flour mixture to the peanut butter mixture and stir until it comes together.
Turn the dough out onto a lightly floured surface.
Using your hands, gently knead in the oats and your lavender or chamomile, if using.
Press the dough into a rectangle about ½ inch thick. Use your hands, not a rolling pin. This dough is a little crumbly, and the warmth from your fingers helps it hold together beautifully.
Cut out shapes with your cookie cutter (or a pizza cutter; squares are perfect).
Place the treats on an ungreased cookie sheet.
If you're decorating: whisk the egg yolk with a bit of water, divide into small bowls, and stir in food coloring.
Brush the "icing" onto the unbaked treats with a pastry brush or the back of a spoon.
Bake at 325°F for 30 minutes.
Remove and let cool completely before serving.