Make the Shortbread Cookies:

1. Cream butter and sugar together using a stand mixer fitted with the paddle attachment (or in a large mixing bowl with a hand mixer) on medium speed until light and fluffy, about 2 minutes.
2. Add vanilla and beat until incorporated. Gradually add the flour and beat on low speed until combined. Turn the mixer to high speed and beat for 1-2 minutes until dough becomes more breadcrumb like and less dry (You should be able to easily shape the dough into a ball using your hands).
3. Use your hands to shape the dough into a disc and wrap it tightly in plastic cling wrap. Chill for 30 minutes.
4. Remove the dough from refrigerator and transfer to a lightly floured surface. Use a rolling pin to roll the dough out until it is 1/4-inch thick. Use Christmas cookie cutters (or other cookie cutters) to cut out different the cookies.
5. Transfer the cookies to a large cookie sheet lined with a silicone baking mat or parchment paper, placing them 1-inch apart. Re-roll any scraps and repeat to cut out more cookies.
6. Preheat the oven to 350 F. While the oven is preheating, transfer the cookie sheet into the refrigerator to chill (about 10 minutes).
7. Bake cookies for 10-12 minutes, until the edges start to turn golden brown. Leave the cookies on the baking sheet for 5 minutes before transferring them onto a wire cooling rack to cool completely.

Prepare the Royal Icing:

1. In medium mixing bowl, whisk together confectioners' sugar and meringue powder.  Add water and vanilla extract and beat with a hand mixer on medium-high speed, until smooth. If you find that the icing is too thick, add a little water (a teaspoon at a time). If you find the icing too thin, add a little more sugar.
2. To colour the icing, add gel food colouring. You can also use liquid food colouring, but this will have a slight effect on the consistency of the icing. You may need to add a little more sugar to get the consistency right.

Decorate the Cookies:

1. Transfer the icing into a piping bag fitted with a no.3 round piping tip (up to a no.5 round tip). Outline the base colour of the cookie, leaving about ⅛-inch from the edge, and fill in the inside. Allow the base to dry and set so that when you add icing on top, it won't smudge or blend into each other, about 20-30 minutes.
2. Use the same piping tip (or you can use a finer tip such as a no. 1 round tip) to add finer details such as lines and dots.