In a medium saucepan, combine water, 2 tablespoons of sugar, salt, vegetable oil, and vanilla extract. Bring to a boil over medium heat.
Once boiling, remove from heat and stir in flour and baking powder until a dough forms. Let it cool for about 5 minutes.
Preheat your air fryer to 375°F.
Once the dough has cooled, use a piping bag or a zip-top bag with the corner snipped off to pipe small bite-sized pieces onto a parchment-lined tray.
Place the churro bites in the air fryer basket in a single layer, making sure they are not touching. You may need to do this in batches.
Air fry for 8-10 minutes or until golden brown and crispy.
While the churro bites are cooking, mix 1/2 cup of sugar and 1 teaspoon of cinnamon in a bowl.
Once cooked, immediately toss the churro bites in the cinnamon-sugar mixture until well coated.
Serve warm and enjoy!