Each nautical flag has both an alphanumeric value and a specific meaning. For example, the “C” flag is also used to mean “Yes.” The meanings and value of each flag are found in the appendix. The chart also includes the phonetic pronunciation (used over the radio to avoid confusion) and Morse Code for each letter and number.
Flag communication can be one way, e.g. simply alerting other boats that there’s a “diver below,” or a more sophisticated two way dialog. The latter is rare, and there is no need for a recreational sailor to memorize the flag meanings, but the chart should be kept onboard for reference.