When you color granulated sugar, you can add a small amount of liquid food coloring to the sugar, mix it in and let the excess moisture evaporate. It is much more difficult to dye powdered sugar because it is so fine that it clumps together almost immediately after any kind of liquid is added. To make matters worse, it dissolves very easily if you mix it around at all, so stirring it in is quite the challenge when you compare it to granulated sugar. As a result, I tend to keep my confectioners’ sugar white. Wilton recently launched a series of colored dusting sugars in blue, pink and green that allows for much more colorful presentations than white sugar alone.
There are is no hassle to trying to use these sugars (unlike trying to make your own), just pretty pale colors to use as accents. They stand out well on a dark background, but are perfectly visible on a light colored cake or frosting. You can simply sift the colorful sugars on top of cakes, cookies or brownies, just as you would with regular sugar, but they add a new element to cake and cupcake stencils when you use them to make different designs.