Usually "embellish" is what someone does who adds to a story they have heard, adds more to an experience than what really happened, or outright makes up lies about someone or something. It can also refer to "ornamentation."
Dictionary.com defines "embellish" as:
to enhance (a statement or narrative) with fictitious additions.
In embellishment with literature, I expect this means that more information is provided than might otherwise be necessary in the telling of the tale. Of course, when the author does this, he adds details that provide a clearer image of a character and/or a better understanding of the plot.
In John Steinbeck's short story "The Chrysanthemums," the part that impresses me the most comes in the character of the tinker or peddler. The "meeting" of the dogs leads to the casual dialog that connects Elisa and her visitor.
The rangy dog darted from between the wheels and ran ahead. Instantly the two ranch shepherds flew out at him. Then all three stopped, and with stiff and quivering tails, with taut straight legs, with ambassadorial dignity, they slowly circled, sniffing daintily...Now the newcomer dog, feeling outnumbered, lowered his tail and retired under the wagon with raised hackles and bared teeth.
The man on the wagon seat called out, "That's a bad dog in a fight when he gets started."
Elisa laughed. "I see he is. How soon does he generally get started?"
The man caught up her laughter and echoed it heartily. "Sometimes not for weeks and weeks," he said.
The other embellishment that adds to the significance of the tinker's visit is found in all the details of their "small talk" before the man gets down to the business of asking for work. During this discussion, the reader notes that this is a traveling man who easily makes conversation with complete strangers. However, he seems genuine and easy to relate to. His arrival in the story also allows the author to present the idea that Elisa envies his way of life—important to understanding that she is not totally satisfied with her own circumstances.
He drew a big finger down the chicken wire and made it sing. "I ain't in any hurry, ma am. I go from Seattle to San Diego and back every year. Takes all my time. About six months each way. I aim to follow nice weather."
Elisa took off her gloves and stuffed them in the apron pocket with the scissors..."That sounds like a nice kind of a way to live," she said.
The tinker is able to wheedle some work out of Elisa with his charm and humor—and an expression of interest in her flowers.
The irritation and resistance melted from Elisa's face. "Oh, those are chrysanthemums, giant whites and yellows. I raise them every year, bigger than anybody around here."
He says he knows a woman who would love them, and Elisa generously offers some. These plants are like her children—they are very dear to her.
When the man leaves, we don't realize how much we have learned about Elisa. He could simply have stopped to ask for work and Elisa could have given it to him, but instead we learn of her wish to travel without being tied down—not appropriate for a woman of her era. We see her loneliness as he expresses interest in her flowers—her resistance "melts." There is generosity when she shares her flowers. And we learn how fragile she is when she and her husband drive to town for dinner: there on the side of the road are the discarded plants, where the charming and (we now know) manipulative tinker dumped them once he left Elisa.