Moderators are mostly like normal users. They earn badges and answer questions like everyone else. But there's two badges that moderators are (mostly) locked out of: Deputy and Marshal, which require you to helpfully flag a lot of posts. With the exception of spam flags (quite rare except on the very biggest sites) and Other flags (perhaps even more uncommon), moderators rarely have reason to use a flag; they don't raise flags, they handle them.
There was even a concern raised in Why do diamond mods have the ability to mark their own flags as helpful? that self-handling flags could be abused for badges (which would be an impressively boring and obviously inappropriate feat).
Instead why don't we count flags handled toward the Deputy/Marshal badges? You still have to handle a large amount of flags to get the badges, and the purpose of the badge is the same; helping moderate the community. The badge isn't really about clicking a button that iterates a counter, that's just a means to an end. It's to encourage community moderation. Mods are just doing this from the other side of the table; this change helps keep the motivating factor of that badge for the same purpose, but let mods experience that motivator as well.
I'll note that these badges would still be hard to get on slow sites. After 4 months moderating User Experience I have handled less than 200 flags. It will take me a year or more to get Marshal, so this isn't a "free badges for moderators" proposal.