Line a 8x8 square baking dish with parchment paper. In a small bowl mix together the arrowroot powder & powdered sugar. Set aside.
In a mixing bowl, pour 1/2 cup of the warm water in. Sprinkle gelatin on top, whisk slightly and let sit on the side.
Pour other 1/2 cup of warm water in a small saucepan and add honey. Slowly bring it to boil while stirring constantly for 10-12 minutes.
Using a electric mixer, mix gelatin bowl and start pouring in the honey mixture slowly. Turn mixer to high for 8-10 minutes until the liquid starts to thicken and grow in size. Add vanilla in the last minute and combine.
Sprinkle arrowroot/sugar mixture in the bottom (save half for on top). Pour mixture into prepared baking pan and smooth with the back of a baking spatula. Sprinkle with powdered sugar and arrowroot powder again on top. Let sit for 4 hours before cutting into marshmallow squares.
Store in airtight container on the counter for 3-4 days or up to 10 days airtight in the fridge.