The signal was a banner raised on a long pole. It was often placed on a high hill so people could see it from far away (see also Isaiah 13:2; 18:3; 30:17).
In Isaiah, the phrase a banner for the distant nations appears many times. Sometimes it calls nations to join in battle, as in this passage. In other places, it calls them to share in salvation (Isaiah 11:10, 12; 49:22; 62:10).
The distant nations here refer to the Assyrians and Babylonians. God used them as instruments (tools) of judgment. Assyria conquered Israel in 722 BC. Babylon destroyed Judah and Jerusalem in 586 BC.
Isaiah describes them as wild animals called in to trample the vineyard (Isaiah 5:1–7). They would fiercely attack Israel and Judah until God's judgment was complete (Isaiah 5:27–30).