Flares are a tool that can be used as a light source and can be thrown to scare away wildlife. Flares provide 1 in-game hour of light (or 5 real-time minutes), and unlike the torch, they can be lit in windy weather.
They seem to be more effective than a torch at scaring off wolves, but less effective than a rifle gunshot. A flare can keep wolves at bay.
An expended flare can be picked up, but it currently serves no purpose. An expended flare will be marked in the inventory as "RUINED" and have a red 'X' through the icon, but will continue to contribute weight to your inventory.
A flare cannot be harvested or repaired, but is fairly common to find.