Place coconut in food processor and pulse repeatedly until coconut is fine and not stringy. Set aside.
In a separate, large bowl, stir together condensed milk, melted butter, vanilla extract, and coconut extract (if using).
Pour in coconut and stir well.
Add powdered sugar, stir well.
Place bowl in refrigerator and chill at least 15 minutes.
Remove from refrigerator and roll into 1 1/2 Tablespoon-sized balls (if the filling is too sticky, return to fridge for an additional 10 minutes to chill).
Place on wax-paper lined cookie sheet, repeating until all filling is rolled.
Place cookie sheet in the freezer for 10 minutes.
Prepare melting wafers according to instructions on package.
Dip chilled coconut truffles into dark chocolate, return to wax paper lined cookie sheet and allow chocolate to harden before serving. If topping with sprinkles or toasted coconut, be sure to add before chocolate hardens.
Keep uneaten truffles refrigerated in airtight container.