You determine which questions you wish to flag.
On actual exam, after you flag a question, you will have a screen after Q240, it will ask you if you want to end the exam, review all questions or review flagged questions.
Normally, you flag questions that you are unsure of, or take too much time, remember no more than 2 mins.
The purpose of it, is to save your time and organize yourself. It will be affect any other things in Exam, definitely not score.
For myself, I reviewed all question during first part of exam. I find it too tiring, so I only reviewed flagged questions for second part.
It is same concept for your email when you flagged an email.