I've had transactions flagged for (intentionally) leaving large tips before. These large tips were justified for various reasons, such as comped meals.
What makes you think it was flagged for a large tip specifically, rather than just an unusually high transaction?
It still confused me how they would know it was a $20 steak and $80 tip versus 5x $20 steaks and no tip. It would appear the same, a $100 transaction at Bob's Steakhouse.
The message specifically said it was due to the "unusually large tip". They wanted me to confirm that it was intended.
If the article linked below is to be believed, the credit card company does indeed know how much of the transaction is a tip due to the way the transaction is processed. Note that this was at a full-service restaurant, not tipping at the counter for fast food or some other thing.
Consider when you pay with a credit card at a sit-down restaurant, they read the card first. Then you write in the tip on the receipt, meaning that they process this part later after the initial card reading. It is probably different with the tabletop self-checkout devices though.
I hate %, give me a option to round up to the nearest 5. This is useful for my financial tracking, and I'm willing to bet a lot of people would like nice round numbers. If I buy a coffee or whatever and it's $7 I round up to $10, not because I'm trying to give a good tip but because it's more convenient for me when I'm sitting there doing my finances (I track everything) and while I know that not everyone would universally agree maybe they would only want to round up to the nearest whole dollar the fact remains I feel like most places would actually end up with more total tips overall if that was a one button option