The short explanation
When a device copies a display's EDID and modifies it, the flags are what you modify. Each corresponds to one capability the source will read and act on.
Where you run into it
Most real problems are one flag wide. VRR that is never advertised. An HDR mode you want removed because the display handles it badly. An FRL rate you want capped because the cable is marginal. Flags let you change exactly that one thing and leave everything else as the display reported it.
It also makes testing methodical: change one flag, observe, change it back. That is a far better way to find a fault than swapping cables.
How the DR HDMI 8K handles it
The DR HDMI 8K's video flags are FRL rate (disable, or cap at FRL1 to FRL5), VRR (enable or disable), ALLM (enable or disable), HDR (remove, or set HDR10, HDR10/HLG, HDR10+ or HDR10+/HLG) and DV (remove, or set a preloaded or custom Dolby Vision mode). They apply in COPY TX SINK EDID and MODIFY mode.
Want to test your own HDMI chain?
The DR HDMI 8K is sold through the HDFury.eu web shop.