Preheat the oven to 350°F (175°C). Grease and flour the two 9-inch round baking pans; line the bottoms with parchment paper for easy removal.
In a large mixing bowl, beat together the softened butter and granulated sugar until light and fluffy, about 3-5 minutes.
Add the eggs, one at a time, mixing well after each addition. Then, stir in the vanilla extract.
In another bowl, combine the flour, baking powder, and salt. Gradually add this to the wet mixture, alternating with the milk, starting and ending with the flour mixture. Mix until just combined.
Divide the batter evenly between the prepared baking pans. Bake in the preheated oven for 25-30 minutes, or until a toothpick inserted into the center comes out clean.
Allow the cakes to cool in the pans for about 10 minutes. Then, remove them from the pans and let them cool completely on a cooling rack.
While the cakes are cooling, prepare the frosting. In a mixing bowl, beat together the softened butter and powdered sugar until well blended. Gradually add the milk, combining until the frosting is smooth and creamy.
Once the cakes are completely cool, place one layer on a serving plate and spread a generous layer of frosting on top. Place the second layer on top and frost the top and sides of the cake with the remaining frosting.
Decorate the top with edible grass or coconut flakes to mimic a garden. Place assorted Peeps around the top and sides of the cake, arranging them as desired.
Slice and serve the cake, and enjoy the festive holiday treat!