Is the "bootable flag" needed in today's distributions? If not, then Why is it still in the installers? What is it exactly?
On modern OS'es this is widely unused, as the MBR consists of a minimal stage loader which bootstraps either into its own partition or jumps to another area on the disk where the boot loader code is kept. (An MBR can contain either executable code or the boot partition table among other things. See also this link to an article about the MBR).
As an example, GRUB is written into the MBR and boots whatever partition you choose.
See also this (quite small) Wikipedia page about the boot flag: en.wikipedia.org/wiki/Boot_flag
Every operating system that uses some kind of PC-derived hardware needs to be booted.
This starts with an ancient, OS-independent bootstrap-search which is initiated by the BIOS (basic input output system) of the PC or server.
That BIOS-piece of code tries to load the MBR from the first suitable boot-device. The search order for the boot-device is configurable in the BIOS-setup: which (disk) device first, which next and so on.
The "legacy" MBR tries to find the first primary partition that is marked as bootable and checks wether there is a short magic hex-code on that partition.
If the hex-code is found the rest (the bootstrap loader) is executed by the bios. Here begins the booting of the operating system - may it be DOS, Windows, Linux, ...