Quite apart from their patriotic usage (the flag in the centre of the image is the Dutch national flag, while the one at the top is the flag of Drenthe), flags are very popular in this country for advertising.
It's easy to see why. These photos of flags were taken on my commute last Thursday. Every one of them was flapping briskly in the wind, and unfortunately every single one was pointing in the wrong direction for both my journey to and back from work.
It's a myth that cycling is easy in the Netherlands because it is a flat country. A flat country is also a very windy country, and Wind is far more of a problem for cyclists than a few hills. You can go down the other side of hills, but wind stays with you. It may not be immediately apparent, but it isn't just when the wind is right against you that it is a problem. It still slows you down when it is a side wind, 90 degrees to your direction, and only starts to help you when it significantly behind you. Even then, a tailwind provides less assistance than the same strength headwind hinders you (if this seems strange, try the mathematical analysis here).
This is perhaps why the Netherlands is a big market for the most aerodynamic type of cycles, and why people fit tri-bars even to the most unlikely types of bikes.
As for me ? Well, the wind last week nearly made me late for work on Thursday. It took an hour and five minutes to cover the 31 km to get there, and virtually the same time to get back again afterwards. On Tuesday I had a very similar headwind on the way to work, but the wind had dropped off by the time I got home and the return journey took under 55 minutes.