It's self explanatory really. If you make an item in the item editor and set one of the misc flag 1s, confirming it will automatically uncheck it. Entering and exiting the editing menu for items that defaultly have these flags checked (such as the Wooden Sword) will cause them to automatically decheck. However, checking Misc. Flag 2 will automatically check both Misc. Flag 1 and Misc. Flag 2. Still, having one checked and not the other, unless such a situation is the default on an item and in that case the item can never be edited in any way, is currently impossible.
Item Misc. Flag 1 unchecks automatically(b278)
Discrepancy dealt with!