How do these flags work? Why are they limited? Are they limited by time, by quantity, or perhaps based on your reputation? Why have I seen posts that say
Closed as too localized by X, Y and Z.
Does it have any relation?
I believe if you "inform moderator", then one of the moderators will get the note you leave and come investigate. Obviously, this is asking time and effort of them, so there should be some limit on how many requests one can send. I also believe that they are replenished per day, always with the same maximum regardless of any kind of status. And to be cynical about it, there's a certain "vigilante" personality that would probably abuse the privilege as much as possible. (Though I don't see this personality around here, it's a possibility on a more raucous site, and these rules were designed for the stackexchange network as a whole.)
The message you quote is what appears when a question is closed by voting, an ability which comes with certain amounts of reputation points (it's not much to look forward to, really). Normally a question needs five votes to close, though you'll see fewer if a moderator decides to end the poll early, since they can close a question by themselves. The names listed are the voters; the reason listed is chosen from a list of several predefined reasons that a question shouldn't be on the site, and the one that shows up in the message is the one selected by the majority.
I never did figure out what happens if the vote splits 2-2-1.