In Nathaniel Hawthorne's The Scarlet Letter we learn as early as the chapter of "The Custom House", that the letter is richly embellished in such a way that it demonstrates a form of ancient art- even after the letter is found, worn and weathered:
.....[it] gives evidence of a now forgotten art, not to be recovered even by the process of picking out the threads.
Hester, known for her amazing talent with embroidery, would not only produce beautiful works for her use as well of Pearl's. She also receives commissions from great ladies of society for beautiful dresses and other items. Of course, nobody says where the clothes come from. This is significant because here is Hester, the socially-stained woman of the settlement, making beautiful things for the very people who terrorize and abuse her.
This being said, when Hester decides to furnish a beautiful version of the scarlet letter for herself, she chooses the best of the best: Gold embroidery, showy colors, and bright and sparkly cloth. It is as if Hester, in an ultimate act of anger and revenge, shows off her letter the same way that the women show off the clothes that she makes for them.
Therefore, the embroidery is a symbol of Hester's capacity to do great things, although we do not get to witness all that she is worth. She is certainly a woman with a different mentality and it is almost a shame that Hawthorne chooses to show us Hester through her actions rather than her thoughts.
One can only assume what Hester really feels when she uses her talent to dress up Pearl, the settlement's child of sin, like a princess. One can only assume as well what Hester actually intends to do by showing off her scarlet letter as if it were a badge of honor.
There is certainly a method to her actions. She is clearly sending a message through the boldness of her talent. The embroidery is only one of the many powerful small pieces that Hester still holds to retain some dignity and strength in a society that is both hateful and unfair.