In a small bowl, combine the flour, sugar, baking powder, baking soda, and salt. In a medium bowl, whisk together the buttermilk, egg, melted butter, and imitation vanilla. Add the flour mixture to the buttermilk mixture, and mix until just combined. Don't overmix! Add the rainbow sprinkles. Let the batter sit for 10-15 minutes. It will get bubbly - do not mix it after this point. Those bubbles will make the pancakes fluffy.
Heat a pan over medium heat. Melt some butter in the pan, and add about 1/4 c. of batter to the pan, tilting the pan to make a circle. Cook until lightly browned, flip, and cook for another minute or so until the pancake is cooked through. Repeat with remaining batter. Keep warm in a low-temp oven.
While the pancakes cook, combine the powdered sugar, butter, artificial vanilla, and milk to make a glaze. Start with 1 Tbs. of milk and add another to thin if necessary. Serve pancakes with glaze and additional sprinkles over the top!