i have just played my first kdice game and i asked the exact same question, what does the flag in the corner mean? (i was in second place)
i received a variety of responses.

one person thought it meant i claimed second place (but no higher) and first could relax knowing i can't get first.

one person thought it means i suck up to first and i am a trucer and first will kill everyone except me, which is a "1/2 truce" and everyone hates that..? which sounded bad.

one person, who had flagged for 5th place, claimed it meant nobody was allowed to attack them, and was violent to people who did.

are you allowed to attack someone who is flagged? are you immune once you flag?

there is also something i wanted to ask about placing.... why is it that someone who has one 8 stack with +32 dice is in 7th place, whereas someone with two territories with one dice on each is in 6th? surely the number of dice on a stack should be taken into account...

mmmm, you know a lot for somebody that just played his/her 1st game.

There are many interpretations of what a flag means. You seem to know the most popular ones. Some players tend to choose the most convenient interpretation in each game.

There is not official rule about flags, otherwise it would be enforced by the game itself. You don't have to respect the flags, certainly not early flags.

However, remember that not respecting flags will make you some enemies. It is up to you to keep them and feed their hate ;)

The flag means that you cannot achieve a higher position than the one you flagged for. If you are flagged 3rd, you cannot get 1st or 2nd.

From then on it is up to interpretation.