This is a German flag from the Ansbach-Bayreuth Regiment. Made of white silk damask and measuring 48″ x 50″, it was surrendered to the Continental Army at Yorktown in 1781. It was then sent to the Continental Congress in Philadelphia as a trophy of victory in war. For source and more details, click here.
Images from: http://amhistory.si.edu/militaryhistory/collection/object.asp?id=234&printable=1