10k users can see flags in chat. What are we suppose to do with it, and why these notifications don't go away after "reading" them?
It's exactly the same as the flags list on the main site. You can see what posts have spam/offensive flags and add your own if you like; posts are killed when they get to six flags. The only reason it seems different is on the main site you need to go to a special page to see the list, but on chat there's the special page and the indicator on your gravatar, so you notice it more
Not allowing to clear these flags seems a recipe for removing any once-flagged message — just to get rid of that damn blue circle.
At least spam/offensive flags on the main site aren't thrust at you, so you effectively have to watch them only if you're interested; and this seems to work fine. Chat flags need a similar "I don't care" feature.
Perhaps an option to "ignore this flag" should be added, to remove the notification? Otherwise, it seems like many, many notifications will be piling up (or else everything that gets one flag will get flagged to oblivion).