A WikiBadge provides additional context for the text in which it appears. That is, a badge says or suggests something about the current page or the text around it.
The fact that WikiBadges are links gives them two properties: if you click on them you can then use the ReverseLink property of the badge's page to find all uses of the badge and the badge's page may also contain further explanation of its intent, common usage (or lack thereof) and history.
A good WikiBadge is short enough to be unobtrusive, yet long enough to be self-evident in meaning. Ideally it should be part of the flow of the writing: people should be able to figure it out without having to click on it. WikiBadge's are a distraction. They tempt the reader to click on them. Therefore, if they don't add distinct value to the text, they are harmful. Please use sparingly and to positive effect.
More at WikiBadge.