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Among other loot, I'm occasionally awarded with Badges. There seems to be many different badges, each corresponding to a particular character class. They all sport the same item description;

Gives the user a higher Rank and changes his or her appearance to a Veteran.

I put Veteran in italics because in the game's item description the word is colored yellow, showing it's of some importance.

What does higher Rank mean? What does Veteran mean? What do these items do? They clearly make my characters appear different, but do they have any other signifigance?

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They're hats for your chest. –  kotekzot Aug 16 '12 at 21:23
    
@Kotekzot what do you mean? –  Ender Aug 16 '12 at 21:24
    
It's a TF2 joke since everybody playing it is obsessed with hats even though they do nothing. –  kotekzot Aug 16 '12 at 22:19
    
@kotekzot are you saying the badges do nothing and your sure of this fact? or merely referencing the fact that I'm not sure what they do so they must be hats? –  Ender Aug 17 '12 at 10:03
    
Well, the description mentions something about higher rank. Is that a thing? –  kotekzot Aug 17 '12 at 13:08
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