Embellish party gathering on ship (5,2)
I believe the answer is:
dress up
'embellish' is the definition.
(dressing up is a kind of embellishing)
'party gathering on ship' is the wordplay.
'party' becomes 'dup' (I've seen this in other clues**).
'gathering' means one lot of letters goes inside another.
'on' becomes 're' ('on' can be mean 'with reference to').
'ship' becomes 'ss'.
're'+'ss'='ress'
'dup' placed around 'ress' is 'DRESS UP'.
(Other definitions for dress up that I've seen before include "Make (something) more interesting" , "Look smart" , "Masquerade" , "Adorn" , "Put on fancy clothing" .)