If your referring to the way the flag is presented on a rocket, i.e. sideways along the long line of the rocket - near the name - in most instances, the US flag is presented as if it were flying on a flag pole from the viewers perspective..
Look at the Shuttle Endeavor as an example - the flag is on the right wing of the SS itself, clearly visible during liftoff and in the common presentation position.
The tradition goes back to ships, where the colors were always flown - excluding pirates and the like - and in the case of the Shuttles - since they were named after historical ships, the idea of adding a flag was simplistic:
Discovery, the third orbiter to become operational at Kennedy Space Center, was named after one of two ships that were used by the British explorer James Cook in the 1770s during voyages in the South Pacific that led to the discovery of the Hawaiian Islands. Another of his ships was the Endeavour, the namesake of NASA's newest orbiter....
Columbia, the oldest orbiter in the Shuttle fleet, is named after the Boston, Massachusetts based sloop captained by American Robert Gray. On May 11, 1792, Gray and his crew maneuvered the Columbia past the dangerous sandbar at the mouth of a river extending more than 1,000 miles through what is today south-eastern British Columbia, Canada, and the Washington-Oregon border. The river was later named after the ship....
Atlantis, the fourth orbiter to become operational at Kennedy Space Center, was named after the primary research vessel for the Woods Hole Oceanographic Institute in Massachusetts from 1930 to 1966. The two-masted, 460-ton ketch was the first U.S. vessel to be used for oceanographic research....
Challenger, the second orbiter to become operational at Kennedy Space Center, was named after the British Naval research vessel HMS Challenger that sailed the Atlantic and Pacific oceans during the 1870's....
Endeavour, the newest addition to the four-orbiter fleet, is named after the first ship commanded by James Cook, the 18th century British explorer, navigator and astronomer. On Endeavour's maiden voyage in August 1768, Cook sailed to the South Pacific (to observe and record the infrequent event of the planet Venus passing between the Earth and the sun). Determining the transit of Venus enabled early astronomers to find the distance of the sun from the Earth, which then could be used as a unit of measurement in calculating the parameters of the universe....
