In a stand mixer fitted with the whisk attachment, stir together the confectioners’ sugar, meringue powder, water, and lemon extract on low speed until blended. Turn up the speed to medium-high and whip until light and fluffy, like meringue, about 3 minutes. It will be quite thick, and you need it this way to create glue if you are making a cookie house. You can thin it with more water or thicken it with more sugar to suit your needs.
Add food coloring (if using) to the icing at this point.
Make sure to keep the icing covered at all times, since it dries hard and will develop a skin of hard icing within minutes. I use a damp clean kitchen towel over the bowl. If the icing sits for several minutes between uses, gently stir the bowl well before using, to get rid of any air bubbles, and to make sure the icing hasn’t separated.
Decorate the cookie as you see fit and leave out for about an hour so the icing can harden. The drying time will be determined by the humidity in your kitchen.