In a large bowl beat butter with an electric mixer on medium to high speed for 30 seconds. Add sugar. Beat until combined, scraping sides of bowl occasionally. Beat in milk and vanilla until combined. Beat in as much of the flour as you can with the mixer. Using a wooden spoon, stir in any remaining flour. Remove 1/2 cup of the dough. Tint the remaining dough with green food coloring.
Preheat oven to 325 degrees F. For each cookie, use the green dough to shape ten 1/2-inch balls. On an ungreased cookie sheet, arrange balls in a row of four, topped by a row of three, then two, then one on top. As you arrange the balls, gently press them into each other. Use the plain dough to make a 3/4-inch ball and place it at the bottom of the tree for a trunk. Repeat with the remaining dough, leaving 2 inches between cookies on cookie sheet.
Bake for 10 to 12 minutes or until edges are light brown. Cool on cookie sheet for 2 minutes. Carefully transfer cookies to a wire rack; let cool.
Drizzle Powdered Sugar Icing back and forth over cookies to look like strings for lights. Add decorative candies to icing for lights. Let stand until icing sets.
Powdered Sugar Icing
In a medium bowl stir together powdered sugar, vanilla, and enough milk (3 to 4 tablespoons) to make drizzling consistency.