Well, Shazz got very close. With 6 of the 7 flags.
Going left to right, the flags are..... (drum roll) Canada, USA, UK, Ireland, Scotland, and UN. The last one was the Jolly Roger flag (pirate).
Now, as for the reason for that flag. Daddy formed a flight (squad) from cadet friends, they called themselves Pirate flight. Their mission during wargames was to act like Privateers (pirates), and harass and disrupt enemy units by any means. They were very successful, stealing weapons and supplies from the enemy.
The use of pirates in modern war, especially by the allies, isn't as far fetched as it sounds. During WW2 the allies let loose their PT boats (gun boats, USA, the kind that JFK commanded), and TPB (Torpedo Patrol Boat, UK) in the Mediterranean with the orders to harass, and disrupt enemy shipping. Essentially government sponsored pirates, which history has shown to be true, the first pirates were crown sponsored, and given free reign to loot and plunder enemy ships.
As you can tell both daddy and I are full of useless information, that on very rare occasions comes in handy.