What Do You Mean by 'Badges?'

I was exchanging some emails with an a esteemed educational researcher and administrator about our Big Open Online Course on Educational Assessment and open courses in general and mentioned badges.  In his reply he asked, "what do you mean by 'badges'?"  After an amazing day of progress working with digital badges yesterday, it was a nice reminder of just how new this concept is. So I figured I would reply with a basic explanation and provide some timely updates on one aspect of our badges work.