Reasons an AFAB individual may identify as transfem include but are not limited to identifying as a girl/woman in a trans way, feeling related to transwomanhood or transfemininity, identifying as a girlby or with other non-binary fiagenders, such as being girlflux or a demigirl. This may overlap with intragender for some individuals.
One large reason for an AFAB individual to identify as transfem is if that individual is intersex. Intersex individuals may be assigned a gender at birth, but be born with a hormonal imbalance, or other condition that requires them to receive gender affirming care. Due to receiving gender affirming care, which includes but is not limited to hormone replacement therapy and gender reassignment surgery, the individual may identify more with the trans community, as well as the intersex community and broader lgbtqia+ community
The flag was created by sanrio-kotto on Tumblr, January 6th 2022, and includes every transfeminine person regardless of their AGAB. 
AFAB Transfem is a controversial identity because it has been used by TERFs to discredit transfeminine people through the psyop #biotrans, although there may be AFAB individuals who sincerely identify as transfeminine. Defenders of this identity argue that even if TERFs have used this term to try to invalidate transfeminine individuals it doesn’t necessarily imply that AFAB individuals cannot use the label transfeminine in good faith. TERFs regularly use the terms "man" or crossdresser in an attempt to mock AMAB transfems, but it wouldn't be a solid reason to force people to stop using the term "man" or crossdresser for describing themselves. Supporters of AFAB transfems maintain the idea that no gender identity should be segregated based on the genitalia the individual was born with. Everyone should be able to identify with whatever they want regardless of their sex assigned at birth." AMAB and AFAB transfeminine individuals are simply realities that can coexist perfectly well. One does not invalidate the other one"