With a serrated knife, trim brown crust from top of cake and cut cake in half horizontally. Using a 1-1/2-inch round biscuit cutter, cut out 20 cake circles.
To make glaze, stir together powdered sugar, milk, and vanilla until smooth and glossy.
Place a wire rack over a piece of waxed paper. Using a fork, spear each piece of cake and hold over bowl of icing. Coat sides with a small spatula and coat top by pouring icing over surface with a spoon. (Coating will look lumpy, but it will smooth out as it stands.) Place on rack to set icing, about 20 minutes.
To decorate with stripes, tint about 1/4 cup icing deep pink with food coloring. Drizzle icing from a spoon in a back-and-forth motion over cakes. To decorate with candies, pipe dots or lines with decorating gel and sprinkle candies over gel.