Skill Level Badges are a visual way to further celebrate when a learner Levels Up in a Skill within the game. 

When an administrator chooses and attaches an image as the Skill's Badge, and a learner Levels Up their Skill, that Badge will pop up on the learner's screen as a visual reward.

It's like giving the learner a personalized visual high-five for doing so well, and it adds to the fun!