Sift powdered milk and confectioners' sugar into a medium bowl. Pour condensed milk into the bowl of a stand mixer fitted with a paddle attachment; beat on low speed, gradually adding powdered-milk mixture, 1/2 cup at a time, until mixture is sticky and thick, about 2 minutes.
Using hands coated with confectioners' sugar, divide dough evenly into 4 balls. Transfer dough balls to a surface lightly dusted with confectioners' sugar; cover with plastic wrap.
Line a baking sheet with parchment paper, and lightly dust with confectioners' sugar; set aside. Working with 1 dough ball at a time and with hands coated in confectioners' sugar, knead dough ball until smooth and less sticky, about 2 minutes, adding more confectioners' sugar as needed.
Divide first dough ball evenly into 8 pieces, and roll each piece into a 1-in. ball. Press sprinkles onto outside of ball, and roll between your hands until smooth. Transfer to prepared baking sheet. Repeat process with remaining 3 dough balls. Truffles may be stored in an airtight container at room temperature up to 3 days.