Prepare a 9x9-inch square pan by lining it with foil or parchment paper, ensuring the edges hang over for easy removal later.

In a medium-sized saucepan, combine the white chocolate chips, sweetened condensed milk, and vanilla extract. Place the saucepan over medium-low heat. Stir continuously as the chocolate chips melt, creating a smooth and glossy mixture. Take care not to overheat or cook the mixture at too high a temperature, as this could cause the chocolate to discolor.

Once the chocolate mixture is completely melted and smooth, remove it from the heat. Gently fold in the chopped gumdrops, ensuring they are evenly distributed throughout.

Transfer the fudge mixture to the prepared pan, spreading it evenly with a spatula to create a smooth, uniform layer.

Place the pan in the refrigerator to chill for at least 2 hours, or preferably overnight, until the fudge is firm and set.

Once fully set, lift the fudge out of the pan using the overhanging parchment or foil. Cut the fudge into bite-sized squares and serve. Enjoy this festive treat as a sweet holiday snack or dessert!