Drivers need to know their line through the course, but at 2 key points they need some guidance. Flaggers are the brave souls who endure Pittsburgh weather to provide this guidance. They are sometimes paid in bagels or other breakfast food, as well as getting a prime spot from which to watch the freeroll. The Transition flag is generally somewhere near the cross walk to Phipps, and the Chute flag is, as its name suggests, just before the Chute.
Flaggers (generally) hold the flag high enough for drivers 3" off of the ground to be able to see it as they come over the rise of the middle of the road, lower it as the buggy gets closer, then quickly raise the flag so that they don't hit the pushbar.
Flaggers are also responsible for putting out a stop flag if something happens farther up along the course. This helps prevent further incidents that might arise, adding a measure of safety for all involved.
SNL has even been kind enough to (inadvertently) provide a theme song for flaggers--. Flags of the World