It's busy, the colors clash, and as a 18th century IFF aid, it completely blows. From a distance, it looks like a blob of pink and blue. What, are those dirty colonial rebels or the British East India Company?
As a modern IFF aid, it's hilariously inept.
"Roger that, I cannot ID if they are friendlies or hostiles, they appear to be wearing some sort of pure green-grey insignia. Or maybe they all fell right-sleeve first into chicken poop, cannot confirm, over."
You know what's a good flag design, from both an artistic and identification perspective? This:
In fact, this flag was so successful as an identification aid, that it forced the opponents of its bearers to change their insignia, so that they would avoid friendly fire incidents. In a simplified form, it's still distinctive, and easily recognizable, if a bit reminiscent of modern art.