Preheat oven to 350 degrees F. Grease 3 9-inch round cake pans. Place 9-inch parchment rounds on bottoms of pans and grease if desired.
In a large mixing bowl whisk together the granulated sugar, flour, cocoa powder, baking powder, baking soda, and salt until well combined.
Add eggs, milk, water, vegetable oil, and vanilla extract to bowl on top of other ingredients. Gently whisk the wet ingredients on top to just combine slightly and break eggs. Then whisk all ingredients together until just combined. It's ok if small lumps.
Divide batter between three pans. Bake at 350 degrees F for about 20-25 minutes or until toothpick inserted into middle comes out clean.
Remove cakes from oven, cool slightly, then remove cakes from pan to cool completely.
Beat together peanut butter and softened butter with an electric mixer on medium speed until smooth and well combined. Beat in vanilla and salt. Then slowly beat in powdered sugar a little at a time.
Beat in milk a little at a time until frosting is smooth and creamy. You may not need all of the milk, or you might need slightly more depending on how thin you'd like your frosting.
Place one layer of cake on a large plate or cake stand. Top with some peanut butter frosting and spread to edges. Sprinkle some mini chocolate chips on top.
Top with another cake layer and repeat with frosting and chocolate chips. Top with third cake layer and frost.
SNAPPY TIPS: The frosting recipe makes A LOT of frosting. Should be way more than you need but plenty to decorate with. If you just want a very thin layer of frosting, you may want to start with a half of batch.SNAPPY SUBSTITUTIONS: Instead of chocolate chips or in addition to, chopped chocolate peanut butter candy or chopped peanuts would also be great.