The cleat secures your external halyard/rope when the flag is in place.
Your cleat should be placed at the most comfortable height for the person who will be raising & lowering the flag most often. Typically 4′-5′ above the ground.
To lessen snap banging sounds the cleat should be placed on the pole opposite of the sheave (pulley) in the truck. This allows the halyard to be more tightly secured to the pole.