What is the "Flag" button?
The Flag button is not censorship and it cannot be manipulated by angry mobs.
This feature is called "Flag As Objectionable" and it allows the blogging community to easily note questionable content, which in turn helps blogger take action when needed. Blogger says " we're relying on you, the users, to be our eyes on the web, and to let us know of potential issues that are important to you." Has it ever been a problem? I have never heard of a problem, but, there are all kinds of people.
Why Blogger Created "Flag As Objectionable"
"It is our strong belief that blogs help make the Web an important medium of self-expression; Blogger has given a voice to millions of people. Our users gossip, joke, rant, publish, share, and on occasion might post potentially objectionable stuff. We generally do not review the content posted through our service but our responsibility extends beyond Blogger users to casual readers of Blog*Spot.
The "Flag?" button is a means by which readers of Blog*Spot can help inform us about potentially questionable content, so we can prevent others from encountering such material by setting particular blogs as "unlisted." This means the blog won't be promoted on Blogger.com but will still be available on the web — we prefer to keep in mind that one person's vulgarity is another's poetry. Or something like that.
For more serious cases, such as spam blogs or sites engaging in illegal activity, we will continue to enforce our existing policies (removing content and deleting accounts when necessary).
Here's How It Works
When a person visiting a blog clicks the "Flag?" button in the Blogger Navbar, it means they believe the content of the blog may be potentially offensive or illegal. We track the number of times a blog has been flagged as objectionable and use this information to determine what action is needed. This feature allows the blogging community as a whole to identify content they deem objectionable. Have you read The Wisdom of Crowds? It's sort of like that.
Special Case for Hate Speech
When the community has voted and hate speech is identified on Blog*Spot, Google may exercise its right to place a Content Warning page in front of the blog and set it to "unlisted."
Note: users may click the "Unflag" button if they change their mind.