(Lack of) Widescreen Flag - Please Explain

I am trying to understand what exactly a “widescreen flag” does and why it is important. I picked up a Toshiba RD-XS35 after reading this review on the AVS Forum of the DVR-640H-S. The Toshiba was my second choice (over the 640) but mostly b/c I could get it locally for $320. I have read all 3 pages of the AVS review but still don’t fully understand the importance of having a widescreen flag. Could someone please hold my hand and walk me thru this?

The Tosh is still unopened and I may return it and order a 640 - I honestly don’t know at this point. The rave reviews of the 640’s picture quality are impressing me but I really need to come to grips with the widescreen flag issue. BTW, if someone can recommend something other than the 640 I am open to suggestions. Thank you very much.