In a large bowl of a stand mixer, whisk together the meringue powder and powdered sugar, then slowly mix in the water and vanilla extract while the mixer is running on medium-low speed. Increase speed to medium-high and beat until stiff peaks form, around 5 minutes. This can be done with a hand mixer, but will take a couple minutes longer.
Divide the thick white icing into individual bowls and add gel food coloring, a few drops at a time, mixing well until you achieve the shades you like. From there, you can reserve some of the thicker icing for piping borders as described in the post, or thin all of the icing to flood consistency.
To thin each color to flood consistency, add 1 teaspoon of water at a time and stir well, continuing to add water by ½ teaspoon increments until you reach your desired consistency. If you are thinning the entire batch of icing at once to flood consistency, it will take an additional 3-4 tablespoons for a total of 9-10 tablespoons of water.
Once your icing is colored and the right consistency, scoop it into a piping bag fitted with a Wilton #2 or #3 tip. Decorate your sugar cookies by first outlining the border, then filling in the middle with flood icing which should settle into itself. Use a toothpick or scribe tool to fill in any gaps by spreading the icing around, then tap the cookie on the counter a few times to help the icing settle into a smooth, even layer.
Dry cookies at room temperature for 6-8 hours until the royal icing is completely firm before adding additional layers or design or stacking for transport.