PREHEAT oven to 325° F (300° F for dark-coated pans). Grease 18 muffin cups.
COMBINE brown sugar and butter in small bowl. Sprinkle 1 heaping measuring teaspoon of brown sugar mixture into each prepared muffin cup. Arrange 4 to 5 pineapple tidbits and 1/2 cherry on top of each brown sugar mixture.
COMBINE flour, granulated sugar, dry milk, baking powder and salt in large mixer bowl. Add eggs, water and oil. Beat for 30 seconds on medium speed until mixture just forms a batter. Spoon batter into prepared muffin cups, filling 1/2 full.
BAKE for 18 to 20 minutes or until wooden pick inserted in center comes out clean. Cool for 1 minute. Run knife around edges of the cupcakes; invert onto wire rack(s). Replace any pineapple pieces. Serve warm or at room temperature.
Cupcakes may be reheated on HIGH (100%) power for10 to 15 seconds.