Line a cookie sheet with parchment paper or a silpat baking mat. Place 3/4 cup powdered sugar in a large gallon sized ziploc bag.
Place milk chocolate chips, peanut butter, and butter in a large bowl. Microwave for 1 minute, stir, then heat in additional 30 second increments, stirring after each, until mixture is melted and smooth. Place pretzel nuggets into the peanut butter chocolate mixture and stir to coat.
Place half the pretzel mixture into the powdered sugar bag and seal. Shake to coat the nuggets. Turn them out onto prepared cookie sheet. If bag is too chocolatey to add more powdered sugar into it, get a new bag, place 3/4 cup powdered sugar in it and shake remaining nuggets. Turn out onto cookie sheet and separate any chunks. Let cool and harden.
Before serving, I like to toss them with another 1 cup of powdered sugar, for that thick white look. I do this in two batches, similar to the first shaking, with 1/2 cup of powdered sugar and half the nuggets per batch. Mix with M&Ms, if desired. Store in an airtight container.