Flags
The Flags screen is used to toggle certain inventory flags, these inventory flags are not the kind of things that citizens wave at government events they are simple yes/no style properties that override certain functions preventing you from doing something by accident with an item.

No Trade
With the No Trade flag ticked you can not trade this item using the Trade screen.

No Sale
With the No Sale flag ticked you can not sell this item to an NPC.

No Drop
With the No Drop flag ticked you can not drop this item.

No Swap
With the No Swap flag ticked you can not swap this item or move it in and out of a bag.