Preheat the oven to 350 degrees Fahrenheit. Remove one of the dough portions, unwrap it, and roll it out on a clean + lightly floured working surface until it's 1/4-inch thick. Cut out shapes with your desired cookie cutter and place them on a lipped baking sheet lined with parchment paper, leaving 1-inch of space between the cookies. The cooler the temperature of your room and work surface is, the easier it will be to handle the dough.
Place the pan in the oven and bake until the edge of the cookies *just* get the palest tint of gold, you don't want them to the edges to turn deep gold. The time depends on the size of the cookies, I found that the larger snowflake cookies took about 11 minutes, and the smaller cookies and the ones with very thin edges baked in about 7 to 8 minutes.
Repeat the above process with the remaining dough while the first batch of cookies are baking. When the cookies are done baking, allow them to cool on the baking sheet for 10 minutes before transferring to a wire rack to cool completely.
In the bowl of a stand mixer fitted with the paddle attachment, beat together the powdered sugar, warm water, and meringue powder at low speed for 8 minutes. Allow to rest for 15 minutes for any air bubbles to rise out of the icing. Transfer the icing to a piping bag fitted with a small round tip, and begin icing your cookies (the cookies MUST be completely cool before icing).
If you want a thicker royal icing to create 3-dimensional effects, add more powdered sugar to the icing. If you want it thinner, add a little bit more water to the icing.
Depending on the water content of your icing and how dry/humid your environment is, the icing can take anywhere from 20 minutes to 2 hours to dry after it's been applied to the cookies. Once it's dry, it's safe to stack them (i.e. in a cookie box) for storage without destroying the decorative icing.