This flag is kind of based off of the Chicago flag, which is great!
The blue stripe by the hoist represents the Mississippi River. The quarter-circle represents Lake Michigan. The six stars represent the six states which border Illinois; Wisconsin. Michigan, Indiana, Kentucky, Missouri, and Iowa. There are a total of 102 points on the six stars, which represent the 102 counties of Illinois. The "L" shape of the stars represents Abraham Lincoln, and the state's nickname, "The Land of Lincoln". Also, the blue stripe and the "L" resembles "IL", the state's abbreviaton.
The current Illinos flag is stupid. And the guy who designed it obviously didn't know what he was doing. (duh?) The government of Illinois added the word "ILLINOIS" to the flag so that people would recognize it. If the flag wasn't so complicated, they wouldn't need the words; people would recognize that.