Combine the warm water, meringue powder, and vanilla extract in a large bowl. Whip with an electric mixer on high speed until frothy.
Add the powdered sugar a little at a time. Whip for 8-10 minutes or until soft peaks form. If the mixture looks dry, add water, one tablespoon at a time, until it reaches a stiff-icing consistency.
Divide the icing into bowls and add food coloring to each, beginning with one drop. Stir the coloring into the icing and place plastic wrap against the surface of each bowl to prevent it from drying out.
Scoop half of each color of icing into a piping bags fit with a small round tip (#2 or #3) or use scissors to cut a small tip from the bags.
Add a small amount of water to the remaining icing to thin it out for filling larger areas of the cookies.
Get creative and decorate the cookies! Let dry for 2 hours before storing in a sealed container at room temperature.