Countries are defined globally, only administators should maintain the list of countries. Countries are nothing more than labels, so no complex forms are needed. The flag option is not really used yet, but could be used by other extensions.
Since the country information in the fe_user table is stored as ID's from now on, it might be necessary to convert the current data in fe_users to the new country storage concept. To do this, a conversion tool is included. Go to the Extension Manager and select the '[drecomm] Country access' extension. In the upper-right menu, there is an option 'Country conversion', select it. There will appear two buttons. The first will convert the current country information to ID's (check the checkbox in order to let the conversion tool create countries that are not yet defined globally) and the second will undo this conversion in case you'll decide to uninstall this extension.