Based on the statistics with which I'm most familiar, the #2 and #3 highest motor vehicle crash risks for legally-operating cyclists in urban areas are left turns from oncoming drivers across the rider's path and drivers on side streets and driveways pulling out into the rider's path (#1 is same-direction right turns).

The hypothesis seems to be that the increased conspicuity created by a flashing headlight can reduce these crash risks. And to my knowledge, we have lots of "anecdata" but not much hard data. But the huge reduction in cost in a bright flashing front light since the LED revolution has made many more people willing to see if it helps them.

A cycling industry writer several years ago decried what he described as the "conspicuity arms race" on city streets with varying-brightness motorcycle headlamps, mandated motor vehicle daytime running lights, and bike-mounted flashers. He feared that drivers would either tune it all out or only look for lights, not road users.