I tow the dive flag behind the kayak. As mentioned above, if it is affixed to the yak the flag must be much larger. I just clip the flag/float's line to my stern.
Towing the kayak is very easy, no more trouble than towing a flag. When I still had my yak I had a small folding anchor attached to the reel.
What I do is unfurl the line to the length of the depth and throw the anchor overboard before gearing up. That way, if I drop something that is not tethered, it will sink to under the yak. Once I'm ready to dive, I toss my tank overboard (tethered of course) then slide in wearing mask/fins/snorkel, then don my gear. Then descend the line and off we go!
A sweet thing about towing a yak is that when you find something heavy (think anchor, humongous lobster, treasure chest!) you can put it on your yak and keep diving. Another is that you can put a water resistant hand held GPS on the boat and when you find a honey hole, ascent to the yak and hit the "mark" button and you can return to the site time and time again. DO put a lanyard on the GPS and clip it to your boat.
When I lived in the USVI, conch were plentiful and legal to take but you sure don't want to tow those heavy things back on a beach dive...they fit very nicely into my boat.
I sure do miss having a kayak. I sold my uber-sweet Ocean Kayak Prowler 13 in St. Croix because it cost too much to ship to Hawai'i, then I sold my fairly sweet Ocean Kayak Scupper Pro 15 in Hawai'i because it cost too much to ship to Florida. Once I find a job and catch up on a few bills, I'll be cruising Craigslist for my next plastic boat.
Good to see some interest in yak diving again...it is an absolutely wonderful sport.