The word Degel (“flag”; “standard”) is the word Gadol (“great”) with the letters transposed, and it therefore denotes something that is held high and is conspicuous.
One purpose of the Degel for each tribe, described in this portion, was indeed to serve as a signal for all the members of the family to gather together when journeying.
But there was also the purpose of a flag of an army on the march. Just as the flag signifies the nation or the monarch for whom the army is marching, so also did these flags in the Midbar proclaim that “all the armies of Hashem” (Shmos 12:41) were on the march.
Two principles are enunciated in the words “all the armies of Hashem”:
First, that Israel has no other function than the service as Hashem's army (just as an army has no function other than the service of their king or their country).
Second, that these are the sole army of Hashem: they are “all the armies of Hashem” and no one else has this duty and privilege. As each group journeyed with its flag, it pro- claimed to all the world that the children of Jacob are the chosen servants of Hashem.
The Degel was the emblem of Gedulah: the greatness of the nation chosen by Hashem.
The remarkable fact of the emphasis laid upon division according to families is one of the great lessons of Hashem's ways.
Instead of uniting the entire nation under a single banner as “the sons of Israel,” Hashem consistently insisted on the preservation of family identification.
It was not sufficient to remember that all were the descendants of Jacob, but Hashem desired that the individual lines of pedigree be remembered as much as possible. “Bezalel ben Uri ben Chur” (Shmos 31;2); “Korach ben Yizhar ben Kehath ben Levi” (16:1).
One reason was the emotional loyalty to Hashem which is greatly enhanced by the power of family tradition from the great servants of Hashem in the glorious days of old.
Another reason was the purpose of maintaining a memorial in honor of the sons of Jacob; the tribe that bore his name was a glorious monument to each ancestor.
And, as already mentioned (1:2 above). Hashem desired to maintain the especial qualities in which each tribe excelled.