Each community in PieFed can have it's own set of "flair" options that posters can attach to their posts. Clicking on a flair will filter the community to only show posts with that flair so they function as a filtering mechanism as well as a visual identifier.
Community moderators can manage the flair that are available in their communities:
When creating posts, expand the 'more options' area to assign one or more flair to your post:
See it in action at https://piefed.social/c/piefed_meta
Flair doesn't federate yet but it will in coming days.
It's great that Piefed is adding them, but as long as Lemmy is the largest bulk of users it won't really be all that impactful. Flairs lose their utility (or fun, depending on the type and context) when only like 1% of the users can see them.
You say that like it's a bad thing.
Lemmy users missing out is THE reason they'll become PieFed users.