You do not need to allocate a Case Flag license to every user in your Org; however, each user that intends to interact with the Case Flags application will require a license.

• Each user that needs to view or update the Case Flags will require a license.
  • You can purchase 50 licenses, for example, and identify 50 specific Salesforce users that get them. 
  • Sales & Marketing Users, for example, do not generally need licenses.
• A single license is required for whichever user Email to Case runs under.
  • If you are using (standard) Email to Case, this is the user specified as the Automated Case User under Setup > Customize > Cases > Support Settings.
  • If you are using Email to Case Premium, it is the user that is specified as the Context User within the Apex Email Service. A license is required for any system administrators that will configure Case Flags.
• If you are using Business Hours, a job will run nightly as the user that enables Business Hours. Be sure this user is licensed at all times to ensure the job completes successfully.
  • You can easily change this user by logging in as that new user and disabling and re-enabling Business Hours.
• If you are using a Customer / Partner Community or Portal, those users do not need to be licensed in most instances.
• Self-Service Portal users do not need to be licensed.
• A license is required to configure Case Flags.

For more information, see "Assigning Licenses for Installed Packages" by clicking on Help & Training at the top of your Salesforce.com account or contact caseflags@internetcreations.com.