Prepare the cake mix according to the directions on the box. Split the mix into 4 bowls. Add food coloring to each bowl and stir until you get the desired color.
The cake batter will be put into cupcake wrappers. Layer each color into the cupcake wrappers until 3/4 the way full. Bake according to time on the box.
Take the vanilla icing and split into 3 bowls. Color the icing yellow, pink and blue(or whatever colors the kids like). Put the cupcakes in a row...5 for the top, 4 for the middle 3 on the bottom. Frost the cupcakes with a layer of plain white frosting for a base coat. Then spread each later of the rainbow with a different color...
Place marshmellows next to the rainbow layers to make a cloud. When you have them positioned how you like them, ice a coat of frosting to hold the cloud together.