Flare bombs are an item used to light up dark stages. When the area is dark you will only see minor details of the background, and only silhouettes of the enemies. If equipped, you can launch a flare bomb by pressing the start button which will light up the area so that you can see everything like normal.
Some veteran players like to make the games more difficult by purposely not using the flare bombs and beating the area in the dark.
In the NES version the Flare Bombs are guarded by a Federation soldier at the second room of area 13. The only area that they can be used in is area 4. Even if you equip them in other stages and press start you can't use them.
There is a bug in the North American and European versions where the flare bomb will cause the game to reset if the flare hits an enemy.
The Flare returns in Bionic Commando: Rearmed. Unlike previous versions, the flare will automatically turn on in dark areas, and will only light up a circular area around the player.