You can either add a new badge via the 'Add New Badge' button, under 'List Badges', or by selecting the 'Add Badges' link from the Badges dropdown in your admincp.
The Name will be visible as a tooltip on the badge itself.
The Description is not visible to your community users.
The Badge should be a PNG file, at least 50px by 50px.
The Height and Width determine the size of the badge on the user's profile.
Enabling Visibility only displays the badge on the user's profile. (useful if you have a number or badges and don't want to clutter the comments feed/have only a few select badges on the feed, such as 'Moderator'.)
Once you have filled in the badge information, select 'Add Badge' to save and go to the Badges List: