I havn't seen too many Letter Jackets while in Canada.. maybe Canadian schools don't do it
... The basis is you get a big school letter (about 8" tall?) if you are on a varsity team. (Also referred to as a Varsity Letter and Varsity Jacket). You don't need the Jacket to get the Letter though.
Since this thread got ressuructed, I'd like to make a point... you don't even have to go to the school to be awarded the letter.
Case/Point:
2002: Berkley Varsity Letter: FIRST Robotics
2003: Ypsilanti Varsity Letter: FIRST Robotics
Yeah, I'm that cool, I've got a varsity letter from a school I don't go to (Ypsilanti) because I'm on the team.