How, *exactly* do cosmetiecs work?..

[Alien]

To add to that... some of the decals, not all of them, but a select few, also seem to be applicable to your CMDR's flight suit in place of the Elite rank badges. At least they did, I haven't tested it lately.

I know the ranks (Combat, Trade & Exploration .... and probably CQC) generate decals, and those decals can go on your flight suit.