What is “mostly true” about the claim in their judgement? A flag was flown: True. Was it an anti-Black Lives Matter flag? No, but maybe someone somewhere could see it that way, even though it is in fact a Thin Blue Line flag. Therefore, mostly true.
Because of their open bias, PolitiFact has contracts with social media companies to determine truth from lies, to decide which news gets throttled and blocked. This little group of liars decide what news you see or don’t see.