Icing is the creamy, sweet stuff you use to frost a cake — you can also call it "frosting." Some people like the cake part of a cupcake, and others just like to lick off the icing. If you're over five, that's really not acceptable.
Most icing consists of powdered sugar mixed with butter, margarine, cream cheese, or egg whites. In fact, in Britain, powdered sugar is called "icing sugar." Colloquially, you can describe something as the "icing on the cake," meaning it's not vital, but it's a positive addition: "After such a great day, finding that fifty dollar bill on the ground was just the icing on the cake!"