What is the "anise sugar" mentioned in step 3?

The recipe doesn't specify, but you can flavor sugar to your liking with flavored oils or extracts. In this case a few drops of anise oil will do the trick. Or you could do as Nancy suggests and mix it with anise seeds. I would recommend using crushed or ground versions, but that's because I don't like seeds in my teeth. I also think the crushed and ground version disperses flavor a bit more. An intact seed will release a flavor bomb when you chew it, without always flavoring the rest of the food. If you like that idea, use whole seeds, if not, go crushed or ground.

Think of the anise sugar like any similar spiced sugar. Mix the few tbsp of sugar for dusting the cookies with a small amount of anise (ground of whole, your choice). Taste and add more anise if you want.