In a medium saucepan, combine water, crushed cardamom pods, cloves, cinnamon stick, sliced ginger, peppercorns, and nutmeg, then bring to a boil over medium-high heat.
Reduce heat to low and simmer the spice mixture for 10 minutes to allow the flavors to fully infuse into the water.
Add the black tea bags or loose tea to the spiced water and steep for 3-4 minutes, being careful not to over-steep as it can become bitter.
Pour in the milk and honey, stirring to combine, and heat through until steaming but not boiling (about 2-3 minutes).
Strain the chai through a fine mesh strainer into mugs, discarding the tea bags and whole spices, then serve immediately with additional honey if desired.