The rainbow is a symbol of gay pride, as opposed to gay liberation, which used the pink triangle on various colored fields.
The plain 6 stripes does seem to be the flag of choice over the world and probably so for a simple reason of recognition: the flag is often use to mark gay friendly (and in some place, gay safe) establishment so you want to be sure that your target clientele will recognise you.
The rainbow flag has become the easily-recognized colors of pride for the gay community. The multicultural symbolism of the rainbow is nothing new and it plays a part in many myths and stories related to gender and sexuality issues in Greek, Native American, African, and other cultures.
The rainbow flag:
In 1978, Gilbert Baker of San Francisco designed and made a flag with six stripes representing the six colors of the rainbow as a symbol of gay and lesbian community pride. Slowly the flag took hold, offering a colorful and optimistic alternative to the more common pink triangle symbol. Today it is recognized by the International Congress of Flag Makers, and is flown in lesbian and gay pride marches worldwide. In 1989, the rainbow flag received nationwide attention after John Stout successfully sued his landlords in West Hollywood, when they prohibited him from displaying the flag from his apartment balcony. Meanwhile, Baker is still in San Francisco, and still making more flags.
In San Francisco, the Rainbow Flag is everywhere: it can be seen hanging from apartment windows throughout the city (most notably in the Castro district), local bars frequently display the flag, and Rainbow Flag banners are hung from lampposts on Market Street (San Francisco’s main avenue) throughout Pride Month. Visiting the city, one can not help but feel a tremendous sense of pride at seeing this powerful symbol displayed so prominently.
Although the Rainbow Flag was initially used as a symbol of pride only in San Francisco, it has received increased visibility in recent years. Today, it is a frequent sight in a number of other cities as well — New York, West Hollywood, and Amsterdam, among them. Even in the Twin Cities, the flag seems to be gaining in popularity. Indeed, the Rainbow Flag reminds us that ours is a diverse community — composed of people with a variety of individual tastes of which we should all be proud.
For a long time past the rainbow flag has been a sign under which gays and lesbians declare themselves to homosexuality. The rainbow colours symbolize plurality and love of life. The original version had been designed in 1978 by Gilbert Baker, an artist from San Francisco, and has been changed several times since then due to printing reasons (colours). Over the last years the flag has gained popularity as a symbol. The open display of the flag in different forms (e.g. car sticker, button on clothes) shows, that the gay community has enormously gained in self-confidence. They don’t hide themselves any longer, but openly show their gayness in the public.
Which side is up?
There is no "right side up" for this flag. It may be flown either red up or purple up. This information comes directly form Gilbert Baker, the gay artist who conceived of the "The Rainbow Flag" as a symbol of Gay Pride.
I guess that this applies to the plain rainbow flag and to the horizontally symmetrical variants (pink triangle at hoist etc.). However, things like the white lambda on a rainbow background or rainbow smiley flag can’t be freely hoisted upside down, meaning that they may be produced either with red up or with purple up. However, I’d say that most of those variations are more often with red stripe up, as well as plain rainbow flags, especially those that are produced with such a hoisting device that they cannot be inverted.
True enough, and yet it somehow underscores that very point, each gay person is free to be "oriented" in any direction, the freedom it give to groups is likewise unique. A survey we conducted in San Francisco showed that the ratio was about 4 to 1 for red to purple up. We used to tell customers fly red up if you’re in a good mood!
The original gay-pride flag was hand-dyed by Gilbert Baker. It flew in the San Francisco Gay Freedom Day Parade on June 25, 1978. (However, it was not the first time that spectrum or rainbow colors had been associated with gay and lesbian people.) It has been suggested that Baker was inspired by Judy Garland's singing "Over The Rainbow".
After the November 27, 1978 assassination of openly gay San Francisco City Supervisor Harvey Milk, demand for the rainbow flag greatly increased. To meet demand, the Paramount Flag Company began selling a version of the flag using stock rainbow fabric consisting of seven stripes of red, orange, yellow, green, turquoise, blue, and violet. As Baker ramped up production of his version of the flag, he too dropped the hot pink stripe due to the unavailability of hot-pink fabric. Also, San Francisco-based Paramount Flag Co. began selling a surplus stock of Rainbow Girls flags from its Polk Street retail store, which at the time was San Francisco's main gay neighborhood.
In 1979, the flag was modified again. When hung vertically from the lamp posts of San Francisco's Market Street, the center stripe was obscured by the post itself. Changing the flag design to one with an even number of stripes was the easiest way to rectify this, so the turquoise stripe was dropped, which resulted in a six stripe version of the flag - red, orange, yellow, green, blue, and violet.
In 1989, the rainbow flag came to nationwide attention in the United States after John Stout sued his landlords and won when they attempted to prohibit him from displaying the flag from his West Hollywood, California, apartment balcony.
In 2000, the University of Hawaii at Manoa changed its sports teams' name from "Rainbow Warriors" to "Warriors" and redesigned its logo to eliminate a rainbow from it. Initially Athletic Director Hugh Yoshida said that the change was to distance the school's athletic program from homosexuality. When this drew criticism, Yoshida then said the change was merely to avoid brand confusion. The school then allowed each team to select its own name, leading to a mix including "Rainbow Warriors", "Warriors", "Rainbows" and "Rainbow Wahine".
The rainbow flag celebrated its 25th anniversary in 2003. During the gay pride celebrations in June of that year, Gilbert Baker restored the rainbow flag back to its original eight-striped version and has since advocated that others do the same. However, the eight-striped version has seen little adoption by the wider gay community, which has mostly stuck with the better known six-striped version.
In autumn 2004 several gay businesses in London were ordered by Westminster City Council to remove the rainbow flag from their premises, as its display required planning permission. When one shop applied for permission, the Planning sub-committee refused the application on the chair's casting vote (May 19, 2005), a decision condemned by gay councillors in Westminster and the then Mayor of London, Ken Livingstone. In November the council announced a reversal of policy, stating that most shops and bars would be allowed to fly the rainbow flag without planning permission.
Today many LGBT individuals and straight allies often put rainbow flags in the front of their yards and/or front doors, or use rainbow bumper stickers on their vehicles to use as an outward symbol of their identity or support.