Best advice I ever had was that the blue flag was telling the driver to "look in his mirrors" - and it still holds true after more years than I care to recall. Essentially, if you think the guy in front should be aware of the car behind him, then show him the blue. It is then up to him (or the car behind) to decide what to do.
In long races (especially with pit stops) I blue "as a race" until I lose track of who is where and then it is a mixture of knowing who is up at the front and blueing for them and treating the rest as if it is a practice session. The problem with two driver races is that one is usually very good and the other isn't - so that fast/slow car pre-stop is now the opposite!
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