Prepare the cupcakes: Preheat oven to 350°F. Beat butter with a heavy-duty stand mixer on medium speed until creamy. Gradually add sugar, beating until light and fluffy. Add eggs, 1 at a time, beating just until blended after each addition.

Stir together cake flour, baking powder, and salt in a medium bowl. Add flour mixture to butter mixture alternately with coconut milk, beginning and ending with flour mixture, beating at low speed just until blended after each addition. Beat in vanilla and coconut extracts.

Spoon batter into 2 (12-cup) muffin pans lined with paper baking cups, filling each about three-fourths full. Bake in preheated oven until a wooden pick inserted in center comes out clean, 15 to 18 minutes. Cool in pans on wire racks 5 minutes. Remove cupcakes from muffin pans to wire racks, and cool completely, about 30 minutes.

Prepare the frosting: Beat together cream cheese, butter, coconut milk, vanilla, coconut extract, and salt with a heavy-duty stand mixer on medium speed until creamy and smooth. Gradually add powdered sugar on low speed until well blended. Increase speed to medium-high, and beat until light and fluffy. Evenly frost cupcakes.

Prepare the garnish: Place about one-third of the shaved coconut and 1/2 tablespoon of the powdered sugar in a ziplock plastic bag. Add a small amount of luster dust to bag, and seal. Shake bag to coat coconut. Add more luster dust, if desired, until preferred color is reached. Transfer coconut to a fine mesh strainer, and sift off excess powdered sugar. Transfer coconut to a small bowl until ready to use. Repeat process with half of remaining shaved coconut, remaining powdered sugar, and another color of luster dust. Reserve rest of coconut to leave uncolored. Transfer all coconut to a medium bowl, and gently stir to create a multicolored mixture.

Top each cupcake with 1 to 2 teaspoons coconut, and lightly press an indention in center. Add 2 or 3 candy eggs to each nest.