

The Union Flag, popularly known as the Union Jack, is the national flag of the UK. It is the British flag.
It is called the Union Flag because it symbolises the administrative union of the countries of the United Kingdom. It is made up up of the individual Flags of three of the Kingdom's countries all united under one Sovereign - the countries of England, of Scotland and of 'Northern Ireland' (since 1921 only Northern Ireland has been part of the United Kingdom).
The Welsh dragon does not appear on the flag because when the first Union Flag was created in 1606, Wales was already united with England from the 13th century. This meant that Wales a Principality instead of a Kingdom and as such could not be included.
Reference: http://www.woodlands-junior.kent.sch.uk/geography/unionjack.html