The solid green flag is displayed to indicate the start of a race. It is also shown at the end of a caution
period or a temporary delay to indicate that the race is restarting.  If the race is not under caution or
delayed, it is said to be under
green-flag conditions.
The solid yellow flag, or caution flag, requires drivers to slow down due to a hazard on the track.
Under the caution flag, the pace car will enter the course and lead the field at a safe predetermined
speed.  The field is locked into place at the beginning of a caution period.  Drivers are not allowed to
pass another car under caution (excluding crashed and immobile cars).
The solid red flag is displayed when conditions are too unsafe to continue the race or practice, often
when a severe accident has occurred.  Under the red flag, all cars must stop on the track
immediately when the flag is displayed.  Repair work may not be done under red flag conditions.  
Stopping all cars on the track is beneficial to make cleanups quicker and safer for the safety crews.
The solid black flag is used to send a driver to the pits. It is usually used to punish a driver or team
for disobeying the rules, but may also be used when a car is suffering from a dangerous mechanical
failure, such as a loose hood, dragging body panels, or fluid leak.  A rolled black flag pointed at a
driver indicates a warning for overly aggressive driving.
A light blue flag, sometimes with a diagonal yellow stripe, informs a driver that a faster car is
approaching and that the driver should move aside to allow faster cars to pass. If the flag is waved, it
indicates to the driver that the fast car is on its tail.  Only used if slower car is losing a lap.
The white flag indicates the start of the last lap of the race.
The checkered flag---the most famous flag in auto racing--indicates the completion of the race.
Racing Flags
From Wikipedia - www.wikipedia.org