In real life, we know that they simply threw together badges and flipped them on set for Star Wars: A New Hope as they weren't expecting it to be such a hit and the budget wasn't as big as it'd later be.

In universe though? What if the rank badges were one more vestige of the Old Republic that survived?

In today's world, General Officers in the US military have to be confirmed by the Senate.

They could have used Rogue One's Director Krennic for this with a throwaway scene where Krennic complains that he's doing the job of a High Admiral but with a lower rank (or the side pocket rank of Director that can be appointed by the Emperor, instead of a more prestigious Senate confirmed rank.)

This would play into the ANH conference room scene where they discuss the Senate -- it's clear from reading between the lines of what was said and wasn't said -- is that while the Senate was significantly less powerful than in the Republic era; it was still powerful enough to be a concern.

With no Senate confirming ranks anymore (a perk which the Senators would guard jealously) there's no need for pocket/side ranks to get around the Senate, and by Empire Strikes Back, everyone's been rebadged into more standardized ranks.

When I raised this with Curtis Saxton, his reply was:

In your proposal, [are] the thin, single-row badges of ANH the result of field promotions that haven't been registered by the Senate and capital authorities? Perhaps everyone who works in a long-term role related to the Death Star has been under a clandestine veil; disconnected from regular pathways? Tarkin, at the top of the hierarchy, is the exception. The size of the organisational pyramid beneath him has been hidden from the Senate and the Imperial courtiers.

With that idea, the Death Star being a top secret project could also explain the massive inconsistencies -- Tarkin wanted the cream of the crop, but he couldn't promote them normally, hence the bizarre ranks worn in ANH -- those "side pocket" ranks can be appointed by Tarkin or the Emperor.

Basically, instead of Tarkin getting Colonel Saxton confirmed by the Senate as a General, he's vest pocketed as a Sub-Director.

This way, Colonel Saxton gets the rank he needs to execute his job, and Tarkin doesn't have to explain to anyone why so many people are being promoted to General Officers or midgrade positions (Major etc) per capita in his command.

Something like this could also have added color and depth to the SW universe -- we know the Republic is pretty old and has a lot of major racial and subnational groupings within it, e.g Corellia, Kuat, etc.

So the Old Republic into the Early Empire system is probably riddled with rank appendages that are like appendixes, done to satisfy some Senator long ago or induce someone to join the Republic -- we'll recognize your unique rank etc -- and they're kept around due to inertia.

Tarkin saw all this and took advantage of it.

There's also the less sinister uses of such appendix ranks -- during the Clone Wars, battlefield promotions and emergency promotions would have to have been made, and it may have been seen as quicker and easier to "pocket promote" someone than wait for the Senate to do it officially.

Another explanation may have been that while there's a standardized rank insignia used by everyone (similar to US military rank insignia) , there's no standardized usage=equivalence.

For example, from real life:

"[Deak] Parsons was the first naval officer to arrive at Los Alamos, and the army MP on guard became suspicious when Parsons’ papers identified him as a Captain, which in the army called for the insignia of two silver bars and not Parsons’ eagles, which were equivalent to an army full colonel.

The excited MP telephoned the sergeant of the guard. “Sergeant,” he said, “We’ve really caught a spy! A guy down here is trying to get in, and his uniform is as phony as a three dollar bill. He’s wearing the eagles of a Colonel and claims that he is a Captain.”

Thinking some more, let's step back and analyze things from the perspective of the big shot(s) we see in ANH and Rogue One. Looking at it with a fresh eye reveals some things.

Grand Moff Tarkin's Structure

Imperial Navy Structure

Motti
(2 Blue - 4 Red)
(Death Star Naval Detachment CO)

Imperial Army Structure

Tagge
(6 Red)
(Death Star Army Detachment CO)

Molock
(6 Red)
(Death Star Operations Chief)

Imperial Security Bureau Structure

Wullf Yularen
(3 Red - 3 Blue)
(Presumably ISB Death Star Detachment CO)

Unnamed ISB Officer to the Left of Yularen
(3 Blue - 3 Red)
(Presumably 2nd in Command of ISB Detachment)

Imperial Corps of Engineers Structure

Director Krennic at the time of A New Hope
(6 Red over 6 Blue)

Krennic at the time of the Rogue One Prologue – 15 years before ANH
(6 Red)

From staring at the ranks, several things jump out at me:

• Everyone has six bars across; irrespective of color combinations or rows. This may signify general-officer rank.

• The three colors may signify organizational colors:
  
        Civilian/COMPNOR: Yellow
        Imperial Navy: Blue
        Imperial Army: Red

• A second row signifies a significant jump in rank – only Director Krennic and Grand Moff Tarkin have the double rank rack (6 x 2 bars).

• “Colonel” Yularen's rank title may be an organizational artifact of the Old Republic – he has a General Officer rank bar (6 x 1) but a seemingly lower rank – Colonel – than the other officers in the room (who are all Generals or Admirals, etc). Also, like Admiral Motti, Yularen has red and blue bars.

• Motti's bars may represent the fact that he commands both the Death Star's Naval and Marine Detachments (the Imperial Naval Troopers); while Yularen's bars may represent the "dirty secret" that Republic Intelligence (what became the ISB) may have been the actual pre-Clone Wars military force of the Old Republic; a semantic word play way to get around statutory limits on naval/ground force sizes; where they could say with a straight face to the Senate -- we don't have any Admirals; just Colonels.

If you ignore all the silly ranks created by the card games and EU/Disney and assume everyone in the Death Star conference room was a general officer; things start to make a bit of sense.

To give you an example of how "rank heavy" a large command staff can be; I give you Supreme Headquarters Allied Expeditionary Force (SHAEF), circa June-July 1944; via:

Wikipedia
The Supreme Command by Forrest C. Pogue

SHAEF had 1,185 officers, 101 warrant officers, and 3,628 enlisted personnel (4,914 men total); with Eisenhower's personal staff alone having 24 men.

The breakdown by ranks was roughly:

Supreme Allied Commander (4 Star) <-- Eisenhower
Deputy Supreme Allied Commander (4-Star)

Chief of Staff (3 Star)
Deputy Chief of Staff (Operations) (3 Star)
Deputy Chief of Staff (Chief Administrative Officer) (3 Star)
Deputy Chief of Staff (Air) (3 Star)

Secretary, General Staff (Colonel)
Assistant Chief of Staff, G-1 (Manpower) (2-Star)
Assistant Chief of Staff, G-2 (Intelligence) (2-Star)
Assistant Chief of Staff, G-3 (Operations) (2-Star)
Assistant Chief of Staff, G-4 (Logistics) (2-Star)
Assistant Chief of Staff, G-5 (Planning) (2-Star)

Ground Force COs
12th Army Group (3 Star) <--Bradley
6th Army Group (3 Star) <--Devers
21st Army Group (5-star) <--Monty (he's special)
--Individual Armies (3 Star)
--Individual Corps (2 Star)
--Individual Divisions (2 Star)

Air Force Commander-in-Chief (3-Star)
Deputy Air Force Commander-in-Chief (2-Star)

Naval Forces Commander (4 Star)

French Representative (4 Star)
Soviet Representative (1 Star)

The colors, what do those combinations mean?

I think that the the leftmost color of Imperial Rank insignia is the wearer's “Primary Branch”, followed by the rightmost color which shows what specific “joint” schooling they've received.

From an Imperial Army point of view, bars would be:

All Red: This guy's only received pure army training.
5 Red - 1 Blue: This guy has been sent to the Imperial Naval School for Line Officers.
4 Red - 2 Blue: This guy's been sent to Line/Squadron Schools
3 Red - 3 Blue: This guy's been sent to Line/Squadron/Systems Force Schools

Presumably, at this point, the Imperial Army stops sending their men to Naval Schools as a matter of procedure; because does a ground forces officer need to know how to fight and move a Fleet of 400~ ships or more?

Rogue One Costuming

In November 2017, Glyn Dillon posted (THIS) on his Instagram with the following comments:

glyn__dillon
“I sometimes get asked, on Twitter, about certain things to do with the details of Star Wars costumes, especially Imperial costumes. I try to answer as best I can but I can’t always remember... ‘ranking’ is something that crops up every now and then ...so I’ve been meaning to post this on here for a while. My co-designer, David Crossman is a military expert, much like John Mollo was, so this is something he put together, after studying all the OT films and working out what he thought John Mollo was doing with the Imperial ranking. It was devised for Rogue One... and if there are any Imperials in Solo, we would’ve have used this system again... But obviously I can’t say if we did ? I hope it’s useful for all the cosplayers and costumers out there.”

mirahtrunks:
Confused about Krennic. Was he an Army General back in the day? Is he now a General AND security & stormtroopers branch? Krennic if anything here would be operations...am I missing something?

glyn__dillon to mirahtrunks
Dave is really the man who knows a lot more about all this. But I do remember talking with him about the fact that ‘Director’ isn’t really a military rank. But that’s what was in the script. Of course Grand Moff is not a military term used in real life either. I believe Krennic’s white tunic made him ‘intelligence’, like Yularen. Then I suppose he would’ve likely worked his way up until he was in a position to give himself the title ‘Director’. I’m sure someone in the Lucasfilm story group has now come up with all this stuff, or if not, they’re probably working on it for a comic or a novel as we speak. We just have to deal with what we’re given in the script, at the time. I think most of the ‘expanded universe’ back story stuff gets written after we’re long gone.

olivergalbraith to glyn__dillon
my personal workaround is that ISB display the ranks of whichever branch their current assignment is in. In the case of Krennic, he is dealing with both Navy and Army so he displays both Admiral and General simultaneously by layering them on top of each other. This fits with his character, wearing a cape, using flashy non regulation blaster, doing whatever he can to bolster his appearance as an important figure. This same thing can be applied to Yularen. Director of the ISB and only a colonel? No I believe he is just displaying a rank that makes people comfortable around him, he still holds authority, but not so much that people are unwilling to talk to him.

A Potential Empire Strikes Back-era Rank Structure.

After A New Hope, presumably a significant amount of the higher level ANH-era rank structure was scrapped, because now with the Imperial Senate dissolved, the Empire could do whatever it wanted with no civilian oversight – just sign offs from military high command with occasional nods from Palpatine. You see indications of this in Empire Strikes Back, but unfortunately in Return of the Jedi, everyone wore the same rank badges due to costuming screwups.

By accident, I think the table below works out closest to what we saw in Empire, while adhering to the WEG ranking system, and incorporating some of the early ANH stuff without too many discrepancies. One discrepancy is a 2 x 2 bar officer on the bridge of the Executor being referred to as a Lieutenant. I think I can resolve that by making him a “Line Lieutenant” – a semi unique rank held by the Executive Officers of extremely large warships (Star Destroyer and above size), due to them being considered equal to lines.

Code Cylinders = Correlation / Causation

I think Code Cylinders are "Correlation = Causation" because they're indirectly linked to higher ranks.

Average schmuckatelli 2LT newly graduated from an Imperial Academy? He got a single cylinder (standard issue) to hold all of his digital security credentials (authorization to open locked doors under his command, etc etc)

Grand Moff Tarkin?

He's got four because he has a lot more digital security certificates to store and carry around.

“Why do they keep adding more cylinders instead of simply making a bigger capacity storage cylinder?”

Well, it could be for multiple reasons:

1.) Deliberate ease of use decision -- think of the difference between a USB thumb drive and a microSD card -- USB thumb drives are harder to lose than a microSD card which is "sneeze and weep".

2.) They're a standardized format -- given the length of service (centuries) for some Star Wars ships, it may be that they are a known, proven long term reliable solution (if a bit bulky) for digital signatures.

3.) Deliberate design decisions to limit storage on them to say the Star Wars equivalent of 640K to prevent espionage via using code cylinders as repurposed secret data storage devices.