Flagging goes both ways. There's a flagged post in this account's short history where I pushed back on a transphobic comment. Now various comments up from mine and down another branch are all flagged. Transphobic and anti-transphobic comments are all flagged to oblivion.

Probably the hope is that there are more nice people than not-nice people so on the whole the not-nice comments will disappear. From that one experience though it looks like it's at least as much about who's fastest to flag.