When you're on the surface of the green (not the fringe) the flag is not physically in the hole. The flagstick graphic is there on longer putts to assist you in seeing the hole location. As you close in on the hole it begins to fade away.
Since tibbets never hits approaches outside of 7 feet, he probably never noticed. :)
With that being said, I'd like to have the option to turn off the flagstick graphic on the green. The flag waving in the breeze is just one more moving object I want to shut off to keep lag minimized.