These happy holiday cookies are guaranteed to put a smile on your face. In addition to the fun sprinkle mix on top, we added even more sprinkles to the dough for an additional burst of color. Sprinkle mixes can be purchased at most baking supply shops, but you can always mix your own using your favorite shapes and colors.
Make the cookies: Whisk the flour, confectioners' sugar and salt in a medium bowl. Beat the butter in a large bowl with a mixer on medium-high speed until light and fluffy, about 3 minutes. Reduce the mixer speed to low; add the flour mixture and mix until just combined. Beat in the vanilla, then beat in the sprinkles. Divide the dough in half and shape each half into a disk; wrap in plastic wrap and refrigerate until firm, at least 30 minutes.
Preheat the oven to 325˚ F. Line 2 baking sheets with parchment paper. On a lightly floured surface, roll out one disk of dough until 1/4 inch thick. (If the dough starts to crack, let it warm up for a few minutes before continuing.) Using a 2 1/2-inch fluted round cookie cutter, cut out cookies and arrange about 1 inch apart on one of the baking sheets. Gather the scraps, reroll and cut out more cookies.
Bake until the cookies are lightly golden, about 12 minutes. Let the cookies cool 5 minutes on the pan, then remove to a rack to cool completely. Meanwhile, repeat with the remaining disk of dough.
Make the icing: Mix the confectioners' sugar, lemon juice and 3 teaspoons water, adding more water 1 teaspoon at a time until the icing is spreadable. Spread the mixed sprinkles on a plate in an even layer. Spread about 1 teaspoon icing on each cookie, then dip the cookie icing-side down in the sprinkles to coat. Let set 30 minutes.