[whpalmer4]

The Projects button gives you a project-oriented view of your projects, so when you tell it to sort by Flagged, it is sorting the projects, not the actions in the projects. If you have some flagged projects, they will be sorted to the top of the view, and unflagged ones will sort to the bottom of the view. Projects which are unflagged but contain flagged actions will be left in their normal position (sidebar order).

The rule of thumb is that if the display shows you complete projects in outline form, the granularity of sorting, searching or filtering will be the project. If the display shows you actions (not outlined), the granularity will be the action.