This information is subject to change based on the whims of Blizzard developers, tidal forces, and the butterfly effect.

Heroism badges drop from 10 man bosses and Heroics, they can be traded for 10 man equivalent gear.

Valor badges drop from 25 man bosses, and are traded for 25 man equivalent gear.

Note that 25 man gear is roughly a tier up from 10 man.

In other words, the “farming Kara for Sunwell lewtz” is officially dead and gone.

Badges can also be used to purchase Bind to Account items. These items scale according to level, and are equivalent to a powerful blue item at whatever level they are equipped at.

Plate items also scale to become Mail, and Mail to Leather.

For instance, a warrior plate chest at level 70 with +50 Strength would become a mail chest piece with +2 Strength when equipped on a level 1 character.

Right now, however, they only scale every ten levels. So it gets a stat boost at level 20, 30, 40…

One last thing to note.

The badge/honor thingies you get from Wintergrasp (like battleground token, but you use them to receive a sizeable chunk honor when you use them, similar to Argent Dawn tokens) are also bind to account.

So you can effectively send honor points to your alts.

I assume the 25 man badges will buy different and better gear than the 10 mans, and that Badges of Justice will still buy old badge loot.

There’s also something being said about BoJ buying Bind to Account “heirloom items” to pass down to your alts, but I’m ignorant of the subject.