As a moderator, if we're in a hurry, we may look at the flag reason and evaluate the post only on that instead of expanding into looking at every possible thing that could be wrong with a post. Because of that, if flag reasons are wrong, the flag may get declined, even if there's something else wrong with the post. It's helpful to pick the right flag reasons, and to use the custom text when none of the reasons is right.
Moderators (on a non-beta SE site) are here to enforce the clear community consensus. Because of that, if a post is borderline, there are no close votes and there is only one flag, we may decide not to do anything (though in that case we should mark the flag as helpful). We may simply let the flag sit for a bit to give other users a chance to vote to close or flag the post. It's better if a post is closed by several users instead of just one moderator.
If you have the rep to close vote, you should do that on posts you think should be closed. Some mods will even decline a flag asking for a close if the flagger has the rep to close vote and didn't.
Specifics of this post:
That post is about the laws around bicycling. Specifically, about a detail of the legal status of bicycles on the road. We've decided that bicycling legal questions are on topic. Therefore this question is clearly on topic.
Your point about practical, answerable questions would be a not constructive close reason, not an off topic close reason.
That question doesn't appear to be not constructive to me, either. The only flaw I see is that it would be better scoped to a reasonable legal jurisdiction (country or state/province in a country), since laws are very different between countries.
It's definitely an answerable question. Either quoting the relevant laws, giving reasons for why the laws are written that way, or talking about the history behind those laws.
It's not immediately obvious what the practical use is, but it's easy enough to imagine many. Understanding what the bicycling laws are and why they are that way can influence specific riding behavior, and is important background for anybody involved in bicycling advocacy.