In a large bowl, cream together the softened butter and granulated sugar with an electric mixer until light and fluffy (about 2-3 minutes).

Beat in the eggs one at a time, mixing well after each addition. Scrape down the sides of the bowl as needed. Stir in the room temperature sour cream and vanilla extract until just combined.

In a separate medium bowl, whisk together the all-purpose flour, baking powder, baking soda, and salt.

Gradually add the dry ingredients to the wet ingredients, mixing on low speed until just combined. Do not overmix; overmixing will result in tough cookies. The dough will be very soft and slightly sticky.

Divide the dough into two equal portions. Wrap each portion tightly in plastic wrap and flatten into a disk. Refrigerate for at least 1 hour, or up to 24 hours. Chilling is crucial for easy rolling and preventing spread.

Preheat your oven to 375°F (190°C). Line two large baking sheets with parchment paper.

On a lightly floured surface, roll out one disk of chilled dough to about 1/4 inch thickness. Use a round cookie cutter (about 2.5-3 inches in diameter) to cut out shapes. Gather scraps, gently re-roll, and cut more cookies. Repeat with the second disk of dough.

Place the cut cookies about 1 inch apart on the prepared baking sheets.

Bake for 8-10 minutes, or until the edges are very lightly golden and the centers are set but still look soft and slightly puffy. Do not overbake, as this will prevent them from being soft. The cookies will not brown much.

Remove from the oven and let cool on the baking sheets for 5 minutes before transferring them to a wire rack to cool completely. Cookies must be completely cool before frosting.

In a large bowl, cream the softened butter with an electric mixer until smooth and creamy.

Gradually add the sifted powdered sugar, alternating with the milk/cream and vanilla extract. Start with half the milk and add more as needed until the frosting reaches a smooth, spreadable consistency. Beat on medium-high speed until light and fluffy (about 3-5 minutes). Stir in a pinch of salt.

If desired, add a few drops of gel food coloring and mix until evenly distributed.

Once the cookies are completely cool, spread a generous amount of frosting on each cookie using an offset spatula or knife. Immediately top with sprinkles, if using, before the frosting sets.