Symbolism, Imagery, Allegory
Not only is the handkerchief bloody, but it's also a busy little piece of linen. Before getting into the symbolic meaning of the bloody handkerchief, let's quickly chart how it moves throughout the story.
The infamous hanky first pops up when Horatio tells Bel-Imperia how he plucked it from "the lifeless arm" of Andrea, and how he now wears it as a "remembrance of [his] friend" (1.4.42-43). Bel-Imperia then says something like, "yeah, I know that hanky, I gave it to Andrea as a token to remember me by while he was in battle." So, from early on we see that the hanky is a symbol of memory and love, both in terms of friendship and romance.
Not So Fast
But it's also a symbol for violent death, right? And perhaps there's already some blood on it, seeing as Andrea was killed while wearing the hanky. Anyway, Isabella tells Horatio to go ahead and "wear thou it both for him and me," which is to say the hanky is now a symbol for the shared love between Horatio, Andrea, and Bel-Imperia (1.4.48).
So yeah, it's complicated.
Not Done Yet
But wait, the journey of the hanky is far from over. Because after Horatio is murdered in the bower, Hieronimo finds it on his son's body and says, "Sees't thou this hanky besmeared with blood? It shall not from me till I take revenge" (2.5.51). So now the hanky has become a symbol for memory and revenge.
And Hieronimo will continue to use the prop to remind him of his son's murder. At the end of the play, Hieronimo dramatically produces the hanky just before his suicide. After this, the hanky is no longer needed, because from Hieronimo's perspective justice has been served and these memories are symbolically erased by revenge.
The Gist, Please
To recap: the hanky begins as a symbol of romantic love; then becomes a symbol to remember the violent death of a best friend; it then changes again to represent the love of three close friends and lovers; and finally shifts to symbolize the violent death of a son and the revenge mission of a distraught father. If all of this reminds you of the Sisterhood of the Travelling Pants, please watch this clip to to gain some clarity.
After achieving clarity, just know that the hanky ultimately represents memory, friendship, love, violence, and vengeance. In other words, the entire play resides on one bloody handkerchief. Oh yeah, very deep stuff, indeed.
For those of you experiencing literary vertigo, relax in the comfort that it's okay for something to symbolize more than one thing. In fact, we secretly think the hanky might also symbolize how germs get passed around.
But don't tell your teacher that.