It used to be that only moderators acted on flags. But now many flags are handled by the community in review queues, and moderators never even see those flags.
The feedback users get from flags can be confusing to outright misleading at times. How are users supposed know what the difference between a declined and a disputed flag is? I'm rather more involved in SE meta issues than the average user, and even I regularly get confused about the path flags actually take and who or what decides their fate. Flags can be handled by mods, by other users or automatically, the current feedback doesn't distinguish any of these cases.
The current way of displaying feedback is not effective, as it isn't really telling users what actually happened. We shouldn't assume users are familiar with the intricacies of flag handling, but we should explicitly spell out who decided on the flag and why.
The flag feedback should indicate whether a moderator, the community or an automatic process (e.g. edited VLQ flags) decided the status of a flag.
There should also be some indication on the difference between declined and disputed, or a change of terms there entirely. The difference is far from obvious, and it should be spelled out explicitly as we can't assume users to know it.
There is a big difference between a moderator declining a flag, and getting a flag declined by a review queue. And users should be told what happened.