Preheat oven to 180C/160C fan-forced. Grease two 7cm-deep, 20cm-round cake pans. Line base and sides with 2 layers of baking paper.
Using an electric mixer, beat butter, vanilla and sugar until light and fluffy. Add eggs, 1 at a time, beating until combined after each addition. Add flour. Beat on low speed, gradually adding milk, until just combined. Divide mixture between 5 bowls. Using food colouring, tint 1 portion purple and remaining portions blue, green, pink and yellow. Add banana-flavoured powder to yellow mixture and strawberry essence to pink mixture, stirring to combine.
Using half of each coloured mixture, drop tablespoons of the mixtures, alternating colours, into 1 prepared cake pan. Repeat with remaining mixtures and cake pan. Run a butter knife back and forth through both mixtures to create a slight marbled effect (don’t over-marble). Bake cakes together for 1 hour or until a skewer inserted into the centre of each cake comes out clean (cover cakes loosely with foil if over-browning). Stand in pans for 10 minutes. Turn, top-side up, onto a wire rack to cool completely.
Make Buttercream icing: Using electric mixer, beat butter for 5 minutes or until light and fluffy. Gradually beat in icing sugar until pale and fluffy. Add vanilla. Beat until combined. Add enough white colouring, if using, to make icing white.
Using a serrated knife, level tops of cakes if necessary. Place 1 cake on serving plate. Spread 3/4 cup of icing over top of cake. Top with second cake. Spread remaining icing over top and side of cake. Using picture as a guide, decorate top with MMs and Smarties. Use remaining colours for the row along the base. Serve.