5.3 is a perfectly suitable pH for growing blueberries so I am surprised at the recommendation to add sulfur. IOW, the soil does not require an acidifier. Nitrogen supplementation is always recommended as it so mobile and doesn't hang around very long.

I would consider just mulching the plants well with compost. Alternately, you could apply cottonseed meal for a natural source of N as well as being a natural acidifier. Or, you could just apply a packaged fertilizer formulated for acid loving plants, aka a rhododendron, azalea and camellia (RAC) fertilizer.

Is it better to mix with water and apply or spread granules?

Instructions for application should be spelled out clearly on the package label. Methods differ depending on product. If you are referring to the Espoma Soil Acidifier, the instructions are quite clear:

"Apply in the spring to lower soil pH. For new plants use 1-1/4 cups. For established plants use 2-1/2 cups. Spread evenly around the plant out to the drip line and water well. Repeat in 60 day intervals until desired pH or bloom color is achieved."

It is important to understand that this Espoma product is NOT a fertilizer - it is a soil amendment and IMO, not a necessary one for your situation. If you want to use an Espoma product, use the Holly-Tone instead. This IS a fertilizer and will supply both the nutrients required as well as mild acidifiers.