In the old days, different kingdoms would hold bloody competitions to find out who can get bragging rights. This arose from the need to control the fights that often resulted to wars because it involved royal blood. When the controlled fights came, rules were implemented to keep fights and tempers within the arena. Otherwise, they would have warred with each other until they killed themselves off.

The competitions during those times were bloody and dangerous. The primary objective was to test the mettle of contestants in battle. This means that the loser might actually die in the competition. To legitimize the results and the forming of the competition, the royal families that joined the event brought their family crest flags. This was also done to show that they were to be respected. Simply crossing their paths outside the arena could mean that you might lose your head. Furthermore, not respecting their representative in the arena also meant death.

These days, the competitions are no longer as bloody as they were before. Strict rules and guidelines prevent any unnecessary injuries in events that require physical contact. Furthermore, other events don't involve contact at all. They just test a different skill. And the different nations of the world bring their world flags so that they can respect the contestants of the other nations as well as be respected by the other nations. This act of bringing their flags isn't new. They just carried it over from the royal families of old. And not respecting that authority could earn you a lifetime of shame because you will be ejected from the game on international television.