White clips are meant to indicate that the flag itself is clean, not torn, and ready for re-use

Yellow Clips are meant to indicate that the flag is Torn or tattered and should be replaced

A red clip denotes no problem with a tattered or torn flag but means the flag should be closely inspected.  It may be  dirt on the flag or may not need to be removed if the only problem is a loose tie.

Royal Blue / Black clips are meant to be used for whatever purpose you would like. Perhaps to indicate a new flag, or just keep them wrapped