Tested in 2.4, probably will work in 3.whatever: it puts flags in your posts kinda like how smilies does with emoticons. About 325 flags more or less. Somehow I have one more flag than codes for flags. Dunno how that happened.
Anyway it is freakin huge. Figure ~325 images each 36 pixels tall eh? The thing is you get to decide which regions you want flags from, so you don't have to have all of 'em if you don't want them. For example there are 51 flags in the "US States" block that you might not have any use for. So you uncheck that section and don't have to deal with 'em.
http://wonderwinds.com/hackblog.php/2009/10/10/vexillopost-flags-in-your-blog-posts :)