There is a "hide" action on posts that is available to users with sufficient privileges (see Admin > Permissions > Hiding or showing any post). By default editors, moderators and admins have this privilege. The original author of a post also has this action available to them.
There also is an option to automatically hide a post after a set number of flags were raised (see Admin > Spam > Automatically hide posts which reach: ### flags). The person who raised the last flag should've seen "flag & hide" as the action, though.
All hidden posts then appear under Admin > Hidden. This includes posts that were hidden due to flags (they are no longer shown under Admin > Flagged, but should still show the number of flags they received).