Really? Well, what would I know? I'm just currently serving in the Royal Norwegian Navy....
Seriously though. There are quite specific rules concerning flag usage, and there are quite specific rules concerning the size of flags. While at sea, we fly "Norges orlogsflagg, størrelse 3" (Norway Naval flag, size 3), which is a relatively small flag (we fly size 4 on the stern monday though saturday, and size 5 on sundays and official flag days). As for different flags, yes we do have two flags. The naval flag (orlogsflagget) and the naval jack (orlogsgjøsen), the latter of which is considerably smaller, being a perfect square in shape. See
here for image. Heuhen, read
this (sorry guys, its in Norwegian). And yes, it is quite forbidden for the commander to fly a larger flag "if he wants to". Trust me on this one.
If there are high-ranking officers or government dignitaries (minister of defence, members of the royal family) with own flags aboard, these are flown from the mast on the starboard side, alongside the sea flag. Additionally, commanding officers ranked Commander and above are entitled to fly a small personal command pennant from the top of the mast. This pennant is flown from the moment the officer assumes command, until he or she relinquish command of the vessel. As such, the pennant is never taken down, even when the vessel is in port, since the vessel is under command.
If you're going to depict ships with the naval flag flying from the stern, you have to include the naval jack in the bow of the ship (unless the ship is currently not on the water (in dock or such), in which case the crew simply fly the naval flag from the stern), and without the sea flag in the mast. The rules are absolute on this point, no "if's", "but's" or "however's".