Icing sugar is granulated sugar ground into a very fine powder. It is useful industrial cooking as it dissolves quickly.
However, for home and smaller commercial use, icing sugar also contains cornflour or wheat flour added to help it flow better. Consequently, icing sugar is not used to sweeten drinks as the flour content would act as a thickener.
Pure icing sugar can be made using a pestle and mortar or a coffee grinder if you want to make your own without any additions.
In baking it is used primarily for making icings, frostings, decorations and for dusting cakes to add a little sweetness as well decoration. It is useful for dusting over cut outs and silhouettes to make patterns.
The fineness of the icing sugar is sometimes defined by X’s on the packaging. The system is straightforward – the more X’s the finer the powder.