In a stand mixer with the paddle attachment, stir powdered sugar, meringue powder, and 3 tablespoons of water (add an additional tablespoon if needed) until combined. Then, beat for 5-8 minutes until peak form. (Yield: 3 cups)
Divide icing between bowls. Cover each bowl tightly with plastic wrap or a damp cloth to prevent the icing from hardening.
Working with one bowl at a time, uncover and add food coloring. Stir until the color is uniform.
Add additional water 1/4 teaspoon at a time, if necessary, to get the icing to a pipeable consistency similar to toothpaste. Transfer about 1/3 of the icing to a pastry bag fitted with a small round tip (size 2 or 3) and cover the tip to prevent the icing from hardening.
Add additional water 1/4 teaspoon at a time to the remaining icing in the bowl until is it flooding consistency. (Drizzle a ribbon of icing over the bowl and it should disappear within 5-10 seconds.) Transfer the icing to a plastic icing bottle or a pastry bag fitted with a small round tip (size 4 or 5) and cover the tip to prevent the icing from hardening.
Repeat with the remaining bowls of icing.
Use the thicker, pipeable consistency icing to outline the cookies. Start by touching down where you want to start and then slow squeeze icing out of the bag while lifting the bag allowing a strand of icing to flow from the tip. Guide the strand of icing where you want it to go. Touch down again when you want to make a sharp point or when you reach the start again.
Then, flood the inside of the sugar cookie with the royal icing from the icing bottle. Use a toothpick to move the icing around until the whole cookie is covered. If there are any bubbles, use a toothpick to pop them.
If you want to use more than one color on a sugar cookie, allow one color to harden before moving on to the next color. The same is true if you want to pipe additional layers or decorations on top of each other.