From the September Moderator Newsletter:
Marking a flag [declined] is designed to deter serial abusers of the
flagging system, but we found that this “slap on the wrist” was being
used more often than is beneficial.
Flags should be closed as [helpful] under most circumstances. If you
feel strongly that a question was flagged in bad faith, it is okay to
mark it [declined]. But try to err on the side of clearing as
[helpful] whenever the user is trying to be genuinely helpful, even if
you do not necessarily act on the flag.
Users are asked to flag posts to help keep the city street clean. Even
if you feel the flag was not technically correct, you don’t want to
continually send the message that their help is no longer wanted. That
is not what the feature is about.
Worth noting: The vast majority of flags are helpful in some way. Only a small percentage of flags are cast improperly, mostly of the "Please delete this post, the system won't let me" or "This answer is wrong" variety.