Thank, Laura. Yes; the Electorate of Saxony was a strong and vital chunk of the Holy Roman Empire, and you give a good guess... but it still feels like there's a piece missing, and some questions that could stand be answered; e.g.:
If he was a literal flag-carrier (e.g., for ceremonial occasions), was that the public face (and thus title) of some kind of office with other, further responsibilities?
Would that include military duties, if the correspondence with English "ensign" includes the "infantry officer" aspect? (seen in Merriam-Webster) And if there was a military aspect (such as the city militia) associate with his "Stadtfähnrich" office, did that tie in with the aftereffects of the Thirty Years' War (1618-48), which had seen a pair of decisive battles just outside of Leipzig?
Would the title show that he was in fact the official/recognized provider of flags to the city, since he was a cloth merchant?