Setting this enemy flag on non-rock enemies causes one copy of the enemy to spawn in the far northwest corner of the screen and then walk in place infinitely which is doubly strange when they have perfectly walkable combos to the south and east (at least that's what a Stalfos did). That doesn't seem intended to me.
Spawned by "falling rocks" enemy flag awkward(b414)
Fixed in the next build.
Note, though, that warping from the bottom of the screen back to the top is unique to the real rocks and boulders; setting the "Spawned by 'falling rocks'" flag will just spawn three of that enemy along the top of the screen.