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Custard powder is not dried, powdered custard. It is actually a powdered mix used to make custard, and it is very similar to the type of mix used to make instant pudding in the US. Just combine it with milk, cook to thicken, and you have custard (or pudding)! Custard powder is primarily made up of thickeners that give the pudding its texture. Cornstarch is usally the biggest component, since it is great for thickening liquids, disolves easily and is almost foolproof.
Cooks can elect to use the custard as a frosting alternative for cookies and cakes, as well, or as one of many layers in a dessert parfait or trifle. Some have also been known to add a few pinches of custard powder to muffin or cake batter to give the final product an unexpected sweetness and moisture. Custard sauce is another option. Adjusting the proportion of powder to liquid allows cooks to control the overall consistency. Allowing the custard to become runny is often a popular way to create a drizzle sauce or dip for drier desserts such as shortbread or crumb cake.