The Forehead Protector is worn by all official ninjas of a specific village. It is a cloth headband with an engraved metal plate bolted on. The engraving marks the region of the ninja.
Naruto's forehead protector
The Forehead Protector (hitai-ate) is a sign of an official ninja of all the nations in the Naruto series. Since there is no strict dress code of the ninja clans of this world. Different factions are identified by the engraving that is placed on the metal plate of the headband. Each engraving is unique to each region.
The Forehead Protectors were created by Naruto series creator, Masashi Kishimoto, after the pilot story of Naruto was green lit for a regular series. The original design for Naruto Uzumaki had him wearing goggles. Kishimoto found constantly drawing the goggles was a irritation and came up with the concept of the Forehead Protectors as a replacement. Though Naruto is wearing goggles in the first chapter. He quickly gained his Forehead Protector from Iruka-sensei, and hasn't worn goggles since.
To gain a forehead protector. A person must graduate from the ninja academy. The curriculum can start at ages as young as ten. The training includes hand to hand combat, weapon training, such as kunai and shuriken; and certain almost magical techniques called jutsu. This training is not only limited to physical. It is also used for basic education and there are written exams.
Near the end of graduation time, the young ninjas in training are given proper exams. In these they must demonstrate their aptitude with a set of randomly selected techniques. Failure to complete the exam means the ninja must repeat the class until they can either pass the exam of drop out. Graduating means being given a forehead protector, placement on a ninja team, and the rank of Genin.
The ninja of the separate clans have no real set dress uniform to aid in identification of the ranks. That is done through the forehead protector. Normally, most ninja choose to wear the forehead protector wrapped around the head. The cloth section design is optional. Some prefer a type where the whole top of the head can be covered and some use different colors for the cloth portion.
There is no real regulations of where a ninja must wear their forehead protector. Just that it needs to remain visible somewhere on the body. For example, Sakura Haruno wears her's as a hair band, Hinata Hyuga wears her's around the neck, Ino Yamanaka , Might Guy, and Rock Lee all wears theirs as a belt, and Shikamaru Nara wears his wrapped to the sleeve of his clothing.
Itachi Uchiha, a Rogue Ninja of the Akatsuki
If a ninja was to abandon their village or become disavowed as leaving. They will then be classified as a rogue ninja. This can also be a classification of ninjas convicted of crimes against their home village and escaped prosecution. In these cases their name will be placed in the Bingo Book. Though many rogue ninjas will abandon their forehead protector, or continue to wear it without any alteration. Some choose to continue to wear them, but with a special modification. The engraving will be stroked out.
Akatsuki Wearing the sign of a rogue ninja is standard for the group known as the Akatsuki. This is a band of all ninjas rogue from across the whole nation who have left their village for one reason or another. Each members is known as an S-Class criminal. They wear the forehead protectors of their original village and a strike through the village symbol.