Oh ? Well, I guess I'd be pretty embarrassed too. That's a pity, because she really has nothing to blush about. I mean, she has a Celestia-given body, and ... I guess stallions and mares oughta stop talking to her like she's extraordinary - even if she is -, so she feels like she's sticking out of the crowd.
I prefer to think of Fluttershy having big breasts as a "reward" for putting up with all that crap from the other foals at flight camp. And as some others have said it also makes sense from a fertility/ motherly perspective.
As an athletically-built owner of 36DDD's, I have to add that large, perky boobs do not work this way. They would definitely be more squished together and her arm would be more visible , obscuring her breasts a bit. Also, nips tend to show through even the thickest fabric: I can wear three layered shirts and two bras and I will STILL poke through, even if it's just a little. Otherwise: ADORABLE!
Because she is the most motherly of the Mane Six. Large breasts are akin to fertility and are a simple way to show that she is the one to go for when in need of comfort. Tell me those don't look comfortable to lie your head on and I'll tell you that you have some mommy issues.