Traditionally, blue ribbons are given as a reward to a person or thing that comes in first place in a contest.

The term comes from a wide blue ribbon that was the badge of honour of the Garter, the highest (and oldest) rank of the British Order of Chivalry. It was started in 1348 by Edward III. According to legend, while King Edward III was attending a ball, one of the ladies lost a (blue) garter. The king retrieved it, and tied it onto his own leg. Noting the strange looks he was getting from the others, he said "Honi soit qui mal y pense" (Shame on him who thinks {this} evil). This became the motto of the order.

It is also possible, but somewhat less cool, that the term came from the strap used to fasten armour.

The French have their own blue ribbon, the cordon bleu.

If you see some-one with a small blue ribbon pinned onto their chest, lapel, or webpage, they are probably demonstrating their support of free speech.

Real Life
Fighting Words by Christine Ammer