Make the dough. Using an electric mixer in a large bowl, combine the unsalted butter (7 tablespoons), vanilla (1 teaspoon), cream cheese (5 ounces), salt (1/2 teaspoon), and xanthan gum (1 teaspoon) until creamy (about 1 minute). Add erythritol (1 cup ) and almond flour (1 3/4 cups), and combine until they form a dough. Add egg yolk (1) and combine just until it's mixed in. Remove cream cheese from the freezer and cut into 1/4" cubes. Stir the cubes into the dough using a spatula. Place dough in the fridge for 1 hour.
Form + bake. Preheat oven to 350 F and line a baking sheet with parchment paper. Roll the dough into 1" balls, and spread out evenly on the baking sheet. Press the tops of the dough to form round discs. Bake in the oven until the tops become lightly golden (but not brown), about 18 minutes. Allow cookies to cool on a cookie sheet for 5 minutes before transferring them to a wire rack.
Frosting. Meanwhile, use an electric mixer to beat egg white (1) and vanilla (1/4 teaspoon) until frothy. Add erythritol (1 cup) and beat for 5-7 minutes -- you'll know it's done once glossy peaks have formed. If the icing seems too "thick" to spread, stir in 1 teaspoon of water at a time until it has reached a spreadable consistency. You don't want to add too much, or the icing won't thicken!
Decorate. Prep your "sprinkles". Once the cookies have cooled, spread icing over the top. Before it sets, sprinkle any toppings on top of the cookies. Allow icing the harden slightly before serving, and enjoy!