Badges are passive skills that unlock a Warrior's potential. The effects of these badges are permanent and require no further activation. Badges are crafted using Materials dropped by enemies. Higher ranked badges require better quality materials in order to be created. Badges are also arranged in a Skill Tree-like fashion; you have to create the lower-ranked badges in order to access the next level, or create the badge necessary to connect the branching paths between two new badges.
Each character has the same set of badges; however, the Materials needed to create them will vary from warrior to warrior. Completing the whole badge tree will take time and patience, since the high-tier ones require the rare, gold-quality materials. That said, you have to be careful when creating badges; once you allocate them to a character, the materials are permanently gone. Though the game encourages balanced growth for your Characters, prioritize ranking up the more important badges instead.