Reasons an AFAB individual may identify as transfem include but are not limited to identifying as a girl but 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.
The flag was created by sanrio-kotto on Tumblr, January 6th 2022, and includes every transfeminine person regardless of their AGAB. 
AFAB Transfem is controversial because it has been used by TERFs in order to mock transfeminine people, although there may be AFAB individuals who identify as transfeminine in good faith. Defenders of AFAB transfems argue that, although TERFs have sometimes used it to try to invalidate or mock transfeminine individuals, this doesn’t necessarily imply that AFAB individuals cannot use the label transfeminine. TERFs regularly use the terms "man" or crossdresser in an attempt to invalidate or mock AMAB transfems, but isn't a valid reason to force people to stop using the term "man" or crossdresser to describe themselves. Pro-AFAB transfems support the idea that no gender identity should be segregated based on a person's genitalia. 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"