Territory flags are crafted with 3 short sticks and a rope.
To place down a territory flag, you MUST create a group. Hit P, to open the group menu in game.
When you place down the flag, it will be instantly built and automatically assign a flag.
Flags will continuously refresh your base and items every two hours for a period of seven days.
During this seven days, the flag will slowly lower itself. If the flag reaches the bottom of the pole, it will stop refreshing your stuff.
Once the flag stops refreshing, all items, including the flag will de-spawn after four hours.
To tear down the territory flag.
You will need the following tools, in order; Hacksaw, Pickax or Shovel, and then a Sledge Hammer.
First, lower the flag all the way down.
Second, open your inventory and remove the flag from the pole.
Then use the previously mentioned tools in the specific order listed, to dismantle the remainder of the flag pole.