"A condensation cloud forms around an interstage as the Apollo 11 Saturn V encounters max Q, at about 1 minute 20 seconds into the flight (altitude 12.5 km, 4 km downrange, velocity 440 m/s)."
As the Saturn is probably about 15km from the flag (slant range plus the distance from the pad to the flag), I don't see how it can be that big relative to the flag.
I do know there are some techniques to do photos like this, but I am not a photographer.
Regardless, the picture is posted to several NASA web sites, so it was probably done by a NASA photographer.
According the the photograph and its published data,
I deduce that the centerline of the view is upwards at about 18 degrees.
One can also see that the lengthwise dimension of the flag subtends an angle of about 1.5 times that of the Saturn/Apollo rocket.
These data constrain the relationship of the height of the flag to its length.
I calculate that the flag’s height in the air must be about 25.6 times its length. Thus if the flag were, say, six feet long, it would have to be 154 or so feet in the air.
If it were not that high, it would have to be closer and proportionally smaller; for instance, a two-foot flag 51 feet in the air.
A little odd, but not impossible. Perhaps less odd if my estimates of distances and angles are off, in the right directions.