Badges are simply cosmetic enhancements for your Nostr profile. They may be awarded to users for recognition, for participation, or in appreciation of a certain task, goal or cause. Users may choose to decorate their profiles with badges for fame, notoriety, recognition, support, etc.
Some badges are common, some are more rare, and others are extremely rare, only being awarded to small groups of people.
Badges can be created and managed from https://nostrbadges.com and https://badges.page
Several clients will show badges on user profiles such as Iris, Snort, Amethyst, Nostrudel, etc.
Examples:
Attendees of the very first Nostr conference were awarded a unique #Nostrica badge.
Participation in various memes and fun activities on Nostr may yield badges for survival of a #hellthread, making a typo, or collecting a lot of badges. The possibilities are endless here.
Badges may be awarded for subscribing and supporting a Nostr relay, a Nostr client, or service such as NostrPlebs.com, Nostrcheck.me, Nostr.land relays, NoBSBitcoin.com, and more.
Achievements in video games from THNDR (npub1hm6…zr0p) yields Nostr badges showcasing your gaming skills.
Supporting and backing crowdfunded projects on geyser (npub1kmw…xqk9) results in a variety of badge rewards.
Since anyone and everyone can create badges, some badges and even badge providers will be more reputable than others.
In the end, badges are fun, but also can provide or showcase some utility as well.