In Flask, configuration management means setting up app settings step-by-step. First, Flask uses default values. Then, you can load settings from a file like config.py using app.config.from_pyfile. After that, you can override any setting directly in code or with environment variables. This layered approach lets you customize your app easily. For example, DEBUG starts as False by default, stays False after loading config.py if it sets DEBUG to False, and changes to True only after you override it in code. This process ensures your app uses the right settings when it runs.