A campfire blanket is simply an old blanket worn around a campfire to keep warm. Over the years Scouts have used campfire blankets as a place to keep badges that do not belong on their current uniform. These could be badges from events attend or badges traded with other Scouts at Jamborees and other events. For many, the campfire blanket has become a way to show one's personal history in the Scouting Movement.
Campfire Blankets are a lot of fun for youth and adult members to create and show off. They are highly individual and can be as simple as a poncho or a more elaborate hooded cloak. They type of blanket used is often discussed, with many recommending wool because it is more traditional and because it is more fire resistant. However, synthetic fleece is inexpensive, light weight, and easy to sew on.
Several designs for Campfire Blankets can be found at:
Leader Magazine (Now called Scouting Life Magazine) also had an article with campfire blanket designs (Citation needed). If you can find the publication date of that article I can probably post a copy of it.