While Frederic's reasoning for having two separate tags was logical, the tags were not used this way in practice.
Having the tag flags mean one thing and the tag flag mean something else makes no sense at all. One is the plural of the other and they should be synonymous, and this only caused much more confusion between the two.
The flagging tag had many more questions, so it always appeared first in the list and thus everyone always tagged their questions concerning flags with that tag rather than even looking at the other one.
The process of moderators handling flags pretty much goes hand-in-hand with the process of casting them. It's one joint process of casting a flag and having it handled. The two are so closely related and the line between the two so narrow that it just doesn't make sense to separate them at all.
Obviously, all this is just one gigantic, confusing mess, and it's caused several requests for these tags to be merged already.
Since the flags tag was so widely unused and pretty much everything got dumped into the flagging tag, it would be nearly impossible to separate all these questions into their appropriate tags by the definitions previously outlined (seriously, that's a lot of effort for little to no gain). That being said, I went ahead and merged (the few questions there even were to be merged) and synonymized all these tags together under the flags tag.
This change was actually made a couple months ago and has had no noticeable side-affects whatsoever. Let them stay merged.