All Star Wars Imperial officers have some kind of rank badges on theirs chest. As an illustration, here is Firmus Piett, an Imperial Navy Admiral, posing along with a freehand circle and arrow :
How do those badges work? Is there a chart showing the different square configuration for each rank?
The Wookieepedia article Rank Insignia of the Galactic Empire in fact includes several charts.
Essentially, longer bars means higher rank. In some cases, the lower blue rectangles are mixed between blue and orange - this is an older style of rank insignia.
Additionally to the rectangles, the number of cylinders in the pockets plays a part in reading the rank insignia. These are also, I believe, used to authenticate someone's identity to computer systems - one can be removed and dropped into a port, which reads the information stored on it and verifies it against the submitter.
The rank insignia mean different things to the Rebels. To the rebels, they are targets. Bigger bars are bigger targets.
Update: To illustrate "longer bars means higher rank", here's an illustration:
The more square usually mean higher rank. There are some exceptions. For example, a colonel in ISB is equal to a navy admiral. Yellow squares replacing red or blue usually signify higher rank. For example and admiral with three blue squares removed and replaced with yellow is a Grand Admiral. An admiral badge with three red squares replaced with yellow is a Grand Moff.
