Place the coconut into a dry skillet and toast it over medium heat, stirring frequently until it's lightly golden in color. Cool.
Once cool, place the coconut into a food processor and pulse for a few seconds until the coconut is finely chopped. (see alternative methods for chopping with the post at https://kudoskitchenbyrenee.com/toasted-coconut-shortbread/ ) Set aside.
In a mixing bowl, beat together the softened butter and the granulated sugar until light and fluffy (about 4 minutes on high), scraping down the sides of the bowl as needed.
Blend in the salt, and coconut extract to combine.
Add the flour on low speed, and the toasted coconut.
Blend until just combined but do not overbeat. *Note - the mixture bill be slightly crumbly.
Place the cookie batter onto plastic wrap and form the dough into a rectangle.
Chill the dough for at least 30 minutes.
Preheat the oven to 350-degrees.
Divide the chilled dough in half and roll each half to ¼" thickness on a lightly floured surface.
Cut cookies from the rolled dough and place onto parchment-lined baking sheets, re-rolling and cutting the scraps as needed. (shown 2" round cookie cutters)
Bake in a preheated oven for 18-20 minutes, rotating the baking sheets halfway through the baking process. The cookies should be a very light golden brown.
Remove the cookies to a cooling rack to cool completely.
Continue the same process with the second piece of dough.
Once fully cooled, sprinkle the toasted coconut shortbread cookies with a liberal dusting of confectioners sugar, and serve.