Dressing overall a ship consists of stringing international maritime signal flags (arranged in a specific order as listed in the flag regulations) from stemhead to masthead, from masthead to masthead (if the vessel has more than one mast) and then down to the taffrail. It is a sign of celebration, and is done for occasions, anniversaries, and events, whether national, local or personal.
When a ship is properly dressed in harbor, ensigns (in addition to the one flown in the usual position at the stern) should fly at each masthead, unless displaced by another flag, e.g., that of a flag officer. A ship underway would not array herself with signal flags, but the masthead ensign(s) would still signify that she is dressed. 
- 'Flags and Signals' by Cdr R.L. Hewitt, Royal Yachting Association 1969, 1984
- Media related to Ship dressing at Wikimedia Commons