A way of recognizing that only you and the recipient know a piece of information
Yes it can be flirtatious - if I saw a cute girl the other side of the room my first move would be a big smile - a wink is more flirtatious than a smile :)
You answer is illogical. It suggests the OP is delusional about being winked at. In this way you refuse to acknowledge that the act of winking takes place .