This is one of the most often asked questions in the forum, and I have personally answered it at least 5 times since I have been here so I decided to answer it once conclusively. People often ask why Wonder Woman's costume looks like an American flag if she is supposed to represent the international world and global peace. There are basically two answers here - a golden/silver age answer and an answer since the reboot in the 1980s.
First the golden/silver age answer. Wonder Woman was originally designed during the Second World War and a very patriotic theme was incorporated into it. At this point Wonder Woman was not considered to be an international hero, rather she was very much American. Many times after vanquishing an enemy she would say something like "better not to mess with the USA because American values are incorruptible." Towards the end of the silver age Diana was working for the Pentagon, so she was very much not an international hero, though of course she responded to global crises.
With the 1980s reboot, George Perez decided that the character should represent something more than the United States (as she really has no ties there at all) and so her origin was redesigned. What remained though was the iconic American flag inspired costume. In the story line Challenge of the Gods Perez introduced Diana Trevor, Steve Trevor's mother. She was a female test pilot, who through some navigational anomaly accidentally crash landed off of Themyscira. Wandering ashore she found that the Amazons were battling Cottus at the portal to the underworld which they had been given the task of protecting. The many-handed monster Cottus was in the process of trying to break the door and had managed to pull in Phillipus. Diana Trevor intervened though and shot Cottus with her service pistol. Phillipus was freed but Diana was dragged in and killed. Later all that was recovered was the pistol and fragments of Diana's jacket. Knowing only that she was from the outside world, the Amazons had no idea who she was or what she represented, but gave her full military funeral. Being a very militaristic society, they sought to bury her in full military dress, but only had the scraps from her jacket. They decided that the insignia on the jacket, her flying wings and the the American flag would be her battle honours. Two suits were fashioned, one for her burial, and one kept in reserve. When Diana won the right to travel to Man's World she was given this costume to wear as it was assumed that it would be recognized somewhat as the costume of a warrior.
There is a brief description of Wonder Woman's alternate costumes here.
Although Diana has occasionally changed costumes she maintains her links to Diana Trevor always by incorporating in similar motifs (this is true even of her space pirate costume). The one exception is the 1970s mod-girl costume which was introduced before Perez wrote the Diana Trevor character. Another major problem people have with the costume is why is it so revealing if Wonder Woman is supposed to be a feminine icon. From a real world stylistic point of view I can't answer this, other than to say that it is fan service. In the comics though this is somewhat explained. The Amazons are usually displayed as a group of people who have less concerns over the exposure of their bodies than others. They also live in a warm climate where it is natural to not wear as much clothing for comfort reasons. So from the first point Diana is used to wearing a lot less clothes to begin with. Secondly, there is the point that Diana doesn't really need much protection. She is essentially impervious to the elements, and her natural toughness mean that despite revealing so much skin, that it really doesn't add or detract much from her defense. She is often depicted wearing armour, and the armour usually breaks off without her even being injured as it is incapable of the strain of her great strength and endurance. In this sense the less armour she wears, the less there is getting in the way of her while she is doing her heroics.
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