When you flag a post, it becomes a private message to the moderator team.
They can see the specific individual(s) that made the flags.
A post is automatically hidden after a certain amount of flags. How many I am unsure of but it seems to be around 3-5. It's at least more than 1-2.
I did not flag Joe's original post (as I feel someone attempted to imply.). I only ever skim read this thread since it is too full of negativity for my taste and I have better shit to do. I found Joe's joke to be unfunny firsthand and rather tasteless secondly, but didn't find it to be ill-intentioned enough to flag.
I do flag posts that are very hateful, ill intentioned, or are blatantly trying to pick a fight.
Freedom of speech is primarily a regulation that was created with publication in mind and what that means is that any publication site, company, or site owner, have the full right (and with certain hate crime laws and other privacy laws in mind they also have the responsibility and obligation) to hide any material they find unsuitable. That is part of what freedom of speech is about on a legal level.
Also, this put aside: Freedom of speech may mean you have the right to say almost whatever you want, but it also means people around you have the full right to say "wow, you're a jerk, piss off"