Including a LICENSE file in your mod is a good way to let others know what they can and can't do with your mod. Visit the License-Templates folder in this repository to find several common licenses and a guide to help you pick one.
Regardless of which license you choose, you should also establish whether you accept bug fixes, compatibility fixes, and translation updates from the community. You can make this abundantly clear by including the file MAINTENANCE-NOTICE.md in the root directory of your repository.
In the Copyright section of your readme, you should include your copyright notice and list the maintenance policy and license you have chosen. When using one of the Creative Commons licenses, it's a good idea to link to the human-readable summary of the license on creativecommons.org.
Sample copyright section for a mod licensed under CC-BY-4.0:
Copyright
This mod is copyright (c) 2019 Author.
You are allowed to submit maintenance updates for this mod. This mod is additionally licensed under CC-BY-4.0.
Sample copyright section for a mod with no license and no permissions granted except for maintenance updates:
Copyright
This mod is copyright (c) 2019 Author.
Content from this mod may not be mirrored, borrowed, or altered without explicit permission. You are allowed to submit maintenance updates for this mod.
You can include badges at the top of the README file in your repo to quickly convey important information about your mod. You can see this in action on the RealMod readme.
You can create a custom badge and write in the name of the license you are using.
Custom badges can display whatever information you want. You might want to display which platforms your mod is compatible with.
You can visit shields.io to find additional badges and resources to help you make your own custom badges.