Cover the entire styrofoam cone in foil because the styrofoam may not be food safe for the donuts to rest directly on them. The donut tree also looks better with a layer of foil once people start taking off the donut holes to eat.
In a small bowl, make an icing by combining the powdered sugar and the water. Add the water very slowly, so you don't end up with an icing that is too runny. The icing is used to 1) help stabilize the styrofoam base to the plate and 2) glazing about 7-8 donut holes so you can add sprinkles on them.
Add a bit of the icing to the bottom of the styrofoam cone, and set it on the serving plate. The icing will help stabilize the cone as you put on the donut holes.
Add the sprinkles to a plate with a lip, or a wide bottom bowl (like a pasta bowl). Gently dip a donut hole in the icing, rolling it a bit so it has a very thin coat around. Roll the donut hole in the bowl of sprinkles. Set aside. Repeat with about 7-8 more donut holes, or as many as you desire.
Starting at the very bottom of the tree, stick a toothpick into the cone. Stick on a donut hole. Working so the donut holes are touching and almost smushed together, repeat around the entire bottom of the cone.
Working in layers, slowly build up the tree with toothpicks and donut holes. Insert the toothpick in the cone just enough so that the toothpicks don't stick out of the donut holes. Every so often, stick on one of the sprinkle covered donut holes.
As you get higher up the tree, you may find that you need to lightly smush the donut holes a bit to get them to fit around the tree. You will also need to start cutting and angling the toothpicks downwards a little bit when you insert them into the cone so the toothpicks don't stick out the other end of the cone.
Once all the donut cake is complete, then look for any large gaps that might be visible between the donut holes. Take a mini honey comb ball and stick the cocktail stick through the middle so it holds it in place. Insert the decoration into any gaps you want to hide.
Finish the donut cake with a cake topper on top.
I used 48 Krispy Kreme Donut Bites for my 9.8 inch / 25 cm styrofoam cone.Donut holes vary in sizes, so plan accordingly. For smaller supermarket donut holes (and possibly even Dunkin' Donut munchkins), I would suggest purchasing at least 5-6 dozen.I purchased 6 dozen, and ended up with 2 dozen extra. And we ate all the extra donut holes - no problem! These are the super cute mini honeycomb balls. They are 2'' in diameter.