Well this is interesting
The “What does this mean?” link leads to a Blogger help page explaining the Flag button:
The “Flag?” button is a means by which readers of Blog*Spot can help inform us about potentially questionable content, so we can prevent others from encountering such material by setting particular blogs as “unlisted.” […]Self-policing moderation can work very well (in an earlier post I discussed its use on the Motley Fool discussion boards) but only if the moderators respond promptly to reported problems; it remains to be seen how actively Blogger will respond to flagged spam blogs.
For more serious cases, such as spam blogs or sites engaging in illegal activity, we will continue to enforce our existing policies (removing content and deleting accounts when necessary).
Note also that, so far, it’s only appearing on blogs which have been updated since around midday today; less active or abandoned spam blogs currently still carry the old navbar. (For example, both the spam blogs I referenced as examples earlier lack the Flag button, although they’re still presumably happily generating PageRank for whatever they’re spamming.) Blogger could easily sidestep this by forcing a republish of all inactive blogs.
I can’t help wondering what finally made them take action? Suggestions that BlogSpot be excluded from blog search engines? Or maybe feedback from Blogger’s recent user survey? (My first answer to the “how could we improve Blogger?” question: “do something about spam blogs”.)
But whatever the reason: it’s nice to finally see something being done.
There doesn’t seem to be an official announcement yet, but Blogger’s Greg Stein tips the wink in this comment at intertwingly: “take a look at the navbar now…”
[Update: Blogger Buzz announcement.]