The flag is on top of the water tower, and cannot be reached by jumping. You will need the jetpack to reach it (which makes it the last item to be recovered.)
To get the jetpack, recover the golden egg from the caves below Poptropica Towers (use the glow stick from the well in the village) and return it to the giant in the clouds above (climb the vine at the upper left building). The water bucket and jetpack are in the Giant's garden.
(see related question for details)
the things you need for the people in early poptropica are........ a water bucket, signal flag, and the prized porker
What you have to do is jump off the top of the tower with the pilgrim and signal flag.
When the signal flag is raised, a ship docks at the pier and the captain gives you the Island Medallion.
To the far right of Early Poptropica Village. When all the items are returned, he will give you the Island Medallion for Early Poptropica. You must return the Pig, the water Bucket, and the Signal Flag.
Once the pig, water bucket, and flag are returned, the signal flag will be raised and a ship will dock at the pier to the right. Go aboard and the captain will award you the Island Medallion.
Once you return the three items, the island is complete. The signal flag will be raised, and a ship will dock at the Early Poptropica harbor. The captain will give you the Island Medallion.
On the right side of Early Poptropica village is a pier. When you return all 3 lost items (pig, bucket, flag), the signal flag will be hoisted and a ship will dock. Go aboard and the Captain gives you your Island Medallion.
Take the three items back to Early Poptropica village and return them to the owners. When you return the Signal Flag, a ship will dock and the captain will give you the Island Medallion.
The ship will dock at the far right of the Early Poptropica village. You only go there when you have returned the three missing items. No ships can dock at Early Poptropica village without the signal flag. When the flag and other two items are returned, a ship will dock at the pier. The captain will give you the Island Medallion.
The missing items are the Pig, the Water Bucket, and the Signal Flag. (see related question)
The signal flag is on top of the water tower on Main Street, and is the last of the three missing items. Returning the signal flag will allow the man in the tower to raise the flag and a boat man will come and in return he will give you 100 poptropica cridits and a medal
The flag is on top of the Water Tower in Early Poptropica. You will need the jetpack to reach it. (see related question)