The closest vector problem (CVP) and shortest (nonzero) vector problem (SVP) are the core algorithmic problems on Euclidean lattices. They are central to the applications of lattices in many problems of communications and cryptography. Kannan's \emph{embedding technique} is a powerful technique for solving the approximate CVP, yet its remarkable practical performance is not well understood. In this paper, the embedding technique is analyzed from a bounded distance decoding} (BDD) viewpoint. We present two complementary analyses of the embedding technique: We establish a reduction from BDD to Hermite SVP (via unique SVP), which can be used along with any Hermite SVP solver (including, among others, the Lenstra, Lenstra and Lovasz (LLL) algorithm), and show that, in the special case of LLL, it performs at least as well as Babai's nearest plane algorithm (LLL-aided SIC). The former analysis helps to explain the folklore practical observation that unique SVP is easier than standard approximate SVP. It is proven that when the LLL algorithm is employed, the embedding technique can solve the CVP provided that the noise norm is smaller than a decoding radius lambda_1/(2 gamma), where lambda_1 is the minimum distance of the lattice, and gamma is of the order O(2^(n/4)). This substantially improves the previously best known correct decoding bound of the order O(2^n). Focusing on the applications of BDD to decoding of multiple-input multiple-output (MIMO) systems, we also prove that BDD of the regularized lattice is optimal in terms of the diversity-multiplexing gain tradeoff (DMT), and propose practical variants of embedding decoding which require no knowledge of the minimum distance of the lattice and/or further improve the error performance.