Starting in Winter ‘20, Salesforce has introduced a formula option that provides more accurate daylight savings time values without workarounds. 

See the release notes here:
https://releasenotes.docs.salesforce.com/en-us/winter20/release-notes/rn_forcecom_datevalue_formula.htm

This setting has no direct impact on Case Flags calculations. That said, there is no reason not to enable it as it makes the DATEVALUE() function work correctly.