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The ensign identified the allegiance of the ship in what could be a very confusing situation, with thick clouds of gunsmoke obscuring the ships in action, hence the large size of these ensigns typical for the Royal Navy from the 17th to 18th centuries of about 20 by 40 ft (6.1 by 12.2 m). It was commonly accepted that so long as a ship flew its ensign it was an active participant in battle; prior to action it was an acceptable ruse to fly a false flag.
If a ship surrendered then it would take down its ensign (which was known as striking the colors). This is also the origin of the phrase "To nail one's colours to the mast", showing a determination to fight on and never surrender. In practice, warships would fly more than one battle ensign, so that if the flag was destroyed or brought down during the fighting there would be no confusion. Conversely, keeping the flag flying even though the ship might appear to be past fighting was a sign of determination rather than foolishness. The German battleship Bismarck continued to fly its battle ensign even after its gun batteries had all been silenced by British shells, and it sank with the ensign still up.
The battle ensign was seen as an important element for the morale of the crew and was held in high regard. If a warship was sinking and had to be abandoned, flags such as the battle ensigns would be taken off the ship before it sank and were entrusted to the senior (surviving) officer.
Some countries use their national flag as the battle ensign, while others use their naval ensign. Sometimes unique flags were made and used as battle ensigns, for example the one flown by United States Naval Forces at the Battle of Lake Erie in the War of 1812.
In the United States Navy, battle ensigns from American warships and battle ensigns captured from enemy ships are displayed at the United States Naval Academy at Annapolis, Maryland. The battle ensign flown from USS Arizona during the attack on Pearl Harbor by the Japanese Naval Air Forces on December 7, 1941 was badly stained with oil and it was burned as being 'unfit for further use', before anyone thought to save it.
From the start of the Naval Battle of Casablanca during Operation Torch, the USS Massachusetts flew an extra-large battle ensign in the hopes the French Forces would decide not to fight the U.S. Navy. The French decided to fight, and the Massachusetts continued to fly the large battle ensign, throughout the battle.
On 9 November 1914, HMAS Sydney wore a large Australian National Flag as a battle ensign from the mainmast during her celebrated victory over German warship SMS Emden at the Battle of Cocos. The battle was the first naval clash and first victory for the Royal Australian Navy.
In the early days of World War II Captain F. S. Bell of HMS Exeter gave the order to hoist battle ensigns as Exeter turned to engage German "pocket battleship" Admiral Graf Spee, which significantly outgunned her, during the Battle of the River Plate.
During the battle of the North Cape, after being ordered to close with and engage the German battleship Scharnhorst with torpedoes, Captain Skule Storheill of the Norwegian destroyer HNoMS Stord ordered the ship's battle ensign to be hoisted on the mainmast, so that "those bastards can see who they're dealing with!" 
- U.S. Navy Flag Usage and Ceremonies Seaflags. Retrieved: 26 December 2016
- "Archived copy". Archived from the original on 2012-03-18. Retrieved 2011-12-03.
- Nils Owren, at the 13:00 mark "HØR: Skule Storheill og "Scharnhorst"-slaget 2. juledag 1943" (in Norwegian). Norwegian Broadcasting Corporation, 20 October 2010. Retrieved: 6 January 2016