Hi folks. By "flanges", are you referring to the small lip you can see about 2" inside the daggerboard well from the bottom?
Generically, flanges are flat areas whose purpose is to either strengthen a part or provide a bonding surface. So, your exhaust on a car will have a 'flange' that is used as a flat surface for bolting it to the head or another exhaust part. The flat surface of a port that sits on the deck, that you put silicone under, is a flange.
I assume, calling this from memory, on the older boats the dagger board well consisted of 3 molded parts that were later bonded together. The hull, then the well itself, then the deck. So what you have is this 'flange' on each part that's used to bond the parts together. Since no glue is capable of withstanding twisting, flexing, heating and cooling indefinitely, after about 20 years or so the parts need to be glued back together. The purpose of a flange in this case is to enable the parts to be bonded together over a 4cm flat surface rather than a butt joint (or other means), which isn't very strong.
By smearing some sealant on the OUTSIDE of the crack, you're not taking advantage of the superior strength and added surface area of the flanges surface. So picture this: If you smear silicone on the .5 mm crack, there's not much material to keep the water out, whereas if you suck some glue into the 4cm wide flat surface you have basically just made a 4cm seal. And... you've basically just bonded your boat back together, which will stop a little flexing that may lead to more leaks down the road.
For well repairs like this, I'll take a dremel tool and grind out the crack a little (basically just remove a little gel coat), then suck unthickened epoxy into the crack using vacuum. Let it go off and do it again if needed. Then I'll thicken some epoxy, fill the hole if needed then usually leave it or gel it.
Hope that doesn't muddy the waters.
Matt, do you have any pictures of the dagger board well flanges?