In large bowl, with mixer on low, beat together confectioners' sugar, egg whites, and water until well combined. Increase mixer speed to high, and continue beating for 5 minutes. Tint icing with a few drops of sky-blue icing color to make pale-blue color. Using tip of your index finger, spread icing over 1/4 of the cookies. While icing is still wet, decorate some iced cookies with sprinkles, sugar, and glitter. Add 3 more drops of icing color to remaining icing, creating a deeper blue; decorate another 1/4 of the cookies. Repeat process, creating 2 darker shades; decorate cookies as above.