Add the Christmas tree cake pieces, softened cream cheese, milk, and vanilla to a large mixing bowl. Using a hand mixer or stand mixer, blend until smooth and creamy. (A mixer is essential to achieve the perfect fluffy texture!)
Gently fold the whipped topping into the mixture using a spatula until fully combined and fluffy.
Transfer the dip to a serving bowl and refrigerate for at least 30 minutes to allow the flavors to meld.
Just before serving, sprinkle the top with red and green sprinkles for a festive touch and serve with your favorite sweet and salty dippers.