Locomotive Flags - Trains Magazine

The class lights/flags are for use in Timetable & Train Order operation, which has been out of use for many years now.  It was developed before the existence of radios, and better communication has now made it redundant.  In Canada Train Order operation was gone by the early 1990s, and had been confined to lightly trafficked for years before that. 

As Tree68 said, White is an extra train not found in the timetable, Green is for a train which has been split into sections (usually because there is too much traffic for one train) and all sections except the last must display green flags/lights, and Red is the marker for the trailing end of a movement.  CN still equips Distributed Power-capable locomotives with built in red marker lights, but their use is not required by the rulebook anymore.  As far as I know, they are the only railroad besides Amtrak to continue using red markers.