Dish Cloth
Tea Towel
noun
A cloth towel is just a cloth towel. Essentially it's known as a dish cloth or tea towel.
ふきん
This is a jukugo word that uses the on'yomi readings of the kanji. You should be able to read this on your own.
誰かが棒のてっぺんに、日の丸の代わりに布巾をはためかせたみたいですね。
It seems that somebody put a dish cloth on top of the pole instead of the national flag of Japan.