There are a number of methods for using cloth.
Nvidia has some tutorials on their site for cloth that may be helpful. You may have already seen these though and if you have I apologize for throwing more at you that you’ve already tried.
They do have one that is showing a flag pole that is has bones along with the flag using bones then at the end it shows you a comparison of the cloth physX vs the animated one with the bones. Clearly Cloth wins out here in this one.
There are several examples of cloth in our Content Examples Project > Open Level > Cloth. These show you different effects you can have with cloth assets using the wind directional source actor to affect them as well.
Then in the Content examples > Open Level > Material_Advanced we have a demonstration of using a material for animation of a flag. Depending on what your needs may be.
Now to go over some of your questions without just throwing tutorials or examples your way.
To look at the Flag pole example with Cloth using APEX we would only need to have a model of our flag pole and a plane that will be our cloth asset. Once you have these two assets created in your modeling software you’ll want to add bones for the flag pole portion of the model, only one if you do not intend to animate it like it was in the demo video above. Then skin both the flag pole and the plane to the same bone. Apply the APEX cloth modifier and paint the cloth asset appropriately for the cloth animation. Make sure to leave at least one spot a 0 for a painted weight to be a point for the cloth to hold to, as shown in the video above.
Also make sure that you have a material assigned to your cloth asset as well. This will be important for importing into UE4. You will need to apply the cloth apb file to this material so that the cloth parameters behave appropriately.