I'm really talking about small(Chemistry) and medium(Physics) sites here, I'm unfamiliar with SO/SU so I'll exclude them.
In my opinion, one should mark a flag as helpful when one agrees with the flag, even if no action is taken. For example, if an LQ post is flagged as VLQ, but isn't deletable, I would generally mark it as "helpful", because the deletable/non-deletable barrier is fuzzy; and I don't want to discourage the user from flagging other VLQ posts.
I decline a flag when:
- I disagree with it: For example, a custom flag saying that it ought to be closed/deleted for so-and-so reason, which I do not feel is in accordance with the faq/my general feel of the site-specific rules. When not sure, other moderators can be brought in, and the flag will be marked as helpful (the decline shouldn't discourage users from flagging other similar questions which may be on the "bad" side of the fence--this is similar to my remark about VLQ above). I decline when I'm sure of it.
- It is just unwarranted noise
- It is an NAA flag about a wrong answer
- It is a spam/offensive flag about something that isn't spam or really that offensive. Spam/offensive flags are dangerous, they have rep penalties attached to them and all. Improper use of these should not be encouraged in any manner.
- It is a flag that wasn't asking anything from me, in my capacity as a moderator, to do. I may have downvoted the post, but that would be it. A question I sometimes ask myself while declining a flag with this option is "If it had been me instead of the flagging user who saw the post, would I do anything aside from vote (/comment1)?" If the answer is "No", then the flag ought to be declined.
Declining a flag serves the useful purpose of telling a user "don't flag stuff like this again", which keeps the queue from getting bloated and saves our time. It may scare a user from flagging in its entirety, but I think that's a rare case. Thus, we shouldn't restrict ourselves to declining flags in very explicit cases.
But this is just my policy.
1. By comment I refer to a comment that would be left by any normal user, asking for clarification/etc of an already good (not closeable/deletable) post. I am not referring to the comments that have a clear moderator undertone to them. (an implied "or else..." sorta thing)