Place the coconut flakes in a dry skillet over medium heat and toast, stirring constantly, until they turn golden brown and fragrant, about 3 minutes. Transfer to a plate and let cool slightly.
Add the peanut butter, toasted coconut, milk, honey, and ice to your blender.
Blend on high for 30-40 seconds until the mixture is smooth, frothy, and well combined. You should see the ice break down completely, and the smoothie should look thick and creamy.
Taste the smoothie and adjust the sweetness by adding more honey if needed, then blend briefly to incorporate.
If the smoothie is too thick for your liking, add a splash more milk and blend again until you reach your desired consistency. For a thinner drink, add a few more ice cubes and blend.
Pour the smoothie into a glass. Optionally, sprinkle extra toasted coconut on top for added texture and flavor. Serve immediately for the best frosty, chewy experience.