Melt the mini marshmallows in the microwave. Depending on your microwave, I recommend using 30 second intervals when melting. You will need to watch them to make sure they do not overflow and pour out of your bowl in order to avoid creating a sticky mess. I did 3.5 intervals before everything was good and melted.

Pour the melted marshmallows into a large mixing bowl and mix in 3 cups of powdered sugar.

With the mixture still in the bowl, add the remaining powdered sugar. Now apply the oil to your hands and knead the powdered sugar into mixture. Knead for at least 10 minutes. If the mixture gets too firm, add a tablespoon of water.

Apply oil to your counter top and continue kneading. You want the fondant to be soft and easy to mold in your hands. If it is too firm, add water one tablespoon at a time and keep kneading. At this point, you can add some food coloring. Remember that a little goes a long ways so it isn't a bad idea to add it small amounts using a toothpick while you knead.

Your fondant is now ready to be rolled out and applied to your cake or cupcakes. You can also store it in your fridge for later use. Roll it into a ball and use some more oil to grease the outside of it before you double wrap it in plastic wrap. For good measure, also put it in a ziplock bag. This fondant apparently can stay good for a few weeks in the fridge while wrapped up like this.