It's regular old Royal Icing! Surprise!!
But it's soft when you bite into it, not like RI at all!
They put corn syrup in it. At least that's what they told me years ago when I applied for a job there. 
You may want to do a search on the subject because someone had asked that question a while back and it was said something like the icing was a cross between buttercream and royal icing.
I know there was a really long post about cookies by design in the last few months but I couldn't find it, maybe someone else can remember?
But here are a couple of other post that might be of some help to you.
http://forum.cakecentral.com/cake-decorating-ftopict-160601-cookies.html+design
http://www.cakecentral.com/modules.php?name=Forums&file=viewtopic&t=73361&postdays=0&postorder=asc&&start=0
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