Admirals in the Royal Navy would have their own flag and hence would be know by the term of "flag office". It became the general practice that the Admiral of the Fleet would fly his flag from the main mast; the tallest mast. Lesser Admirals would fly theirs from the mizzen. Flag haulyards are secured by pegs so if an Admiral handed over command to a lesser Admiral the flag would need to be moved to a less prominent position or, "taken down a peg or two".
By SailingQuiz October 2019 Category: Nautical Saying
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Definition of the nautical phrase "Taken down a peg or two".