For me, the indicators of authenticity are
1. Addressee's name. Who is the flag for? Who is the flag honoring? Typically this is written in larger characters, vertically, down the right side of the flag. "To Mr. Suzuki, on the occasion of his enlistment.", or "To Mr. Saitō, congratulations on shipping out to the front line.". This kind of thing.
2. Presenter's name: "From Maebashi Technical School", or "From Section Chief of the Sendai Metalworks Factory" etc... Usually also written on the right side of the flag.
3. A date is very nice to have because it locks down a time, and it can be verified against known historical facts, especially if there is a location or school principal's name on the flag.
That's really it for me. Of course a flag can be authentic with none of these things. A flag as the one in this thread may well be authentic, but we don't know who it is for, who presented it, or when it was presented. It is just a white cloth with a bunch of names. So even though it might be authentic, it isn't very interesting because we cannot connect it to a person, a time, or a place.
Because there are so many of these flags on the auction sites, and because they are so easy to make, we must assume that many of them are fakes. I don't know if 90% of them are fakes, but it wouldn't surprise me.