Use a box grater or food processor to grate the potatoes and onion coarsely. Immerse the grated potatoes in cold water to keep them from browning. If you have time, let them soak for 30 to 60 minutes. Soaking in water removes excess potato starch, which helps achieve maximum crispness. Drain and rinse in cold water.
Wrap the grated potatoes and onion in a clean tea towel or cheesecloth, hold over a bowl or sink, and twist the towel to squeeze out the moisture. Get as much liquid out before adding the other ingredients. That's a step you don't want to skip!
Add grated potatoes, onion, flour, eggs, baking powder, salt, and pepper in a large bowl. Stir well. Form your latke mixture into compact patties. I generally use about three tablespoons of mixture per latke.
Add oil to a depth of about 1/4 inch in a large skillet set over medium-high heat. Heat until hot, but not smoking. If the oil starts to smoke or the latkes are burning, turn the heat down slightly, wait a few minutes, and then test it again.
Fry the latkes in small batches for about 3 to 4 minutes per side. Watch for crispness and color; you want them to be a beautiful golden brown.
Drain on paper towels or place them on a cooling rack.
Serve warm with a generous dollop of sour cream and applesauce.