Flags are a great system for addressing issues in content, however sometimes the solution to a flag is not cut and dry. They may require discussion with other moderators or time to gather input from the community before a proper decision can be reached on the flag.
Currently, chat is available for discussing issues with other moderators, but there is no way to make notations on a flag itself about its state. Adding an ability to annotate a flag would aid moderators in coordinating when either discussion is needed or other steps that don't resolve the flag directly need to be taken. It would also offer a better audit record of the reasoning behind moderator actions for any situations where a user is upset about an action.
As a specific example of where this would be useful, one of the communities I moderate recently had a flag for a post that was labeled as "off topic". The question itself is certainly highly borderline, but not quite enough for me to close outright without giving the community a chance to take action. We decided to wait and see what the community does and close if it only receives negative attention for a certain period (since the community itself is too small to reliably close borderline questions some of the time). It would be great to be able to make note of this so we remember what is going on with that flag, but currently we just have to rely on all of our memories to keep track.