The Scarlet Letter is a strongly allegorical work. Hawthorne uses the setting, the "Custom House" introduction, and the red A of the title as allegorical representations of larger, more complex ideas, specifically the concept of sin and the hypocrisy often associated with identifying and condemning it.
The setting of The Scarlet Letter serves both as the basis for Hawthorne's allegorical tale and as an allegorical symbol itself. Hawthorne's Salem is not intended to be a nuanced background for historical fiction. Rather, the use of Puritan New England in general and Salem in particular calls to the reader's mind, especially an American reader's mind, the history of religious extremism in the area, as in the infamous witch trials. As in Arthur Miller's The Crucible or Hawthorne's own "The Minister's Black Veil," Puritan culture is used as a microcosm of moral and religious failure, an allegorical representation of sin, hypocrisy and harsh moralistic judgment.
"The Custom House," the introduction to "The Scarlet Letter," also provides Hawthorne with an opportunity for allegory. This is a unique use of the concept, as "The Custom House" is at least partly autobiographical: Hawthorne was from Salem and did indeed work as the customs surveyor and inspector for the port in that town. Yet he uses his own experience to bear out the allegorical meaning of the work. In describing his daily round he refers to the cemetery where his own Puritan ancestors are interred, and envisions them passing judgment on him: "A writer of story books! What kind of business in life—what mode of glorifying God, or being serviceable to mankind in his day and generation—may that be? Why, the degenerate fellow might as well have been a fiddler!" Hawthorne's "autobiography" thus becomes an allegory for moral and social condemnation. The scarlet "A," which in Hawthorne's case might stand for "Author," never comes off, even 200 years after it was sewn.
As for the A itself, it permeates the text. For each character the scarlet letter is an allegory for sin, and its consequences show us the person beneath it. Hester Prynne, strong and rooted in herself, lives with it, in spite of social condemnation. Arthur Dimmesdale, a Puritan preacher whose life is predicated on the absence of sin, suffers no social condemnation, a poignant reminder of the hypocrisy of how sin is judged, but is still tormented by it to his death. To Pearl, as it were created by the sin in question but sinless herself, it is nothing but a toy, cloth of a pretty color. Finally, Hester and Dimmesdale are buried beneath a single stone bearing the scarlet "A."
That last image is perhaps the most powerful allegorical symbol in the text. First, for the first time Hester Prynne and Arthur Dimmesdale bear equal shares of condemnation for the sin they committed together. Second, it brings the text full circle, returning us to Hawthorne's introduction and his judgmental ancestors. It is an allegory for that inescapable moral condemnation, the one that summoned a twinge of guilt from Hawthorne himself, 200 years removed from the culture of the story. Through the stone, Hawthorne reminds us that the scarlet letter did more harm to the lives of Hester Prynne and Arthur Dimmesdale than the sin itself ever could have and that if Salem had its way, no one would know anything of them except that they once committed adultery. Not even their names appear on the stone.