There are just flags for everything. On land, everywhere you look you would find a flag of some sort, hoisted above a high metal pole, draped over walls of government offices, and practically in any kind of advertising, promotion, or information dissemination. On water, it would prove difficult to have them floating on the water, unless perched top sea vessels as boat flags.
Boat flags are used in a lot of ways for the sea vessels that carry them. Very much like the land counterparts, these flags on the water are also with the same function and meaning with less of the commercial value. More often, they are for identification of ships for other seafarers to identify. Navy boats for example, carry they country flag, plus another flag which denotes their fleet and affiliation. Some of the commercial boats also carry their own custom flag, but still for identification of the company they are working for.
In some cases, there are some special boat flags which are used commonly among all trained merchant marines and combat alike. Plain colored flags, when waved signify a certain code to which other mariners could decipher and get the message. Even with radio and radar, these flags still prove helpful especially when technology fails.