Badges are optional. When you edit your profile, you see a bunch of options that say 'subscriptions'. For each site there you are registered at and active, check the box. All of those are for the reporters. The ones they have are the blogs they moderate. (same with mods)
Banners are for staff and can only be moderated by mods and founders. They display what rank they are. Also, If you donate money to VPF, you get a banner. You can only have one banner at a time, though.