Melt marshmallows and 2 tablespoons of water in a microwave or double boiler:
Put the bowl in the microwave for 30 seconds, open microwave and stir, back in microwave for 30 seconds more, open microwave and stir again, and continue doing this until melted. It usually takes about 2 ½ minutes total.
Place 3/4 of the powdered sugar on the top of the melted marshmallow mix. Greasing your hands GENEROUSLY and heavily grease the counter you will be using and dump the bowl of marshmallow/sugar mixture in the middle.
Start kneading like you would bread dough. You will immediately see why you have greased your hands.
Keep kneading, this stuff is sticky at this stage! Add the rest of the powdered sugar and knead some more. Re-grease your hands and counter when the fondant is sticking. If the mix is tearing easily, it is to dry, so add water (about ½ tablespoon at a time then knead it in). It usually takesabout 8 minutes to get a firm smooth elastic ball so that it will stretch without tearing when you apply it to the cake.
Its best if you can let it sit, double wrapped, overnight (but you can use it right away if there are no tiny bits of dry powdered sugar). If you do see them, you will need to knead and maybe add a few more drops of water.
Prepare the fondant for storing by coating it with a good layer of Crisco shortening, wrap in a plastic- type wrap product and then put it in a re-sealable or Ziploc bag. Squeeze out as much air as possible.
MM Fondant will hold very well in the refrigerator for weeks.