Per the discussion in
this thread regarding the capabilities of the LROC, I emailed an astronomer at Cornell University for an answer to why the LROC could not make out objects on the moon in greater detail. The answer is below:
Every camera and telescope -- and the LRO has a telescope-like set of lenses hooked to the camera, even if it's staring 'down' at the moon -- has a limit of how much detail it can pick up. For cameras, it is a matter of pixel size. For telescopes, it depends on a physical limit to focus the telescope (called the diffraction limit). Normally things are matched so these are roughly the same -- it makes no sense to build a camera with more pixels than your optics can clearly use.
Think about zooming in on a digital picture in Photoshop (or your program of choice). Eventually you get to a point where you are seeing individual pixels. Even if you try to expand it more, you either get squares of color (the pixels) or a blur (the computer smoothing over the pixels).
So, basically, LRO's cameras has a limit of the amount of detail it can make out. It's a pretty tiny limit: LRO has two cameras, one of which can see down to 0.5 m per pixel and a bigger camera that only can see 100 m per pixel. (A lot of missions will have two cameras or camera settings -- one camera to take pictures of the whole planet or moon, another to take detailed pictures of interesting things; if we tried to take a detailed picture of the whole moon, it would take a lot more camera time than we have.)
Now 0.5 m is very good for a planetary mission, but it's still 0.5 meters. At that size, an astronaut laying down would take up around four pixels, and -- considering that LRO is looking 'mostly down' at things -- an astronaut standing up would be about a single pixel. The flag would take up a pixel, though it's shadow might be able to seen; looking down is a terrible angle for flags (but not that bad for flag shadows depending on the time of the day). The lunar rovers would be larger, and top-down isn't as bad an angle for a rover, but even something the size of a car would look about like one of the letters in this email; you can make out what it is, but probably not any fine detail.
LRO could see more if we put it in a closer orbit, but its orbit was chosen to do so it can do both 'large scale' things like use its wide angle camera, and use instruments that need a closer range. It also would be moving faster in a closer orbit, which could affect operations. While more detail is always nice, eventually you get a tradeoff of ' this isn't worth the sacrifice of the other stuff we'd have to do to get this'. (You hear this a lot in space missions. There is a lot of compromise to get the most out of a mission for everyone involved; in this case, looking at pictures of moon rocks to learn things about large processes like craters and lava floods versus using instruments to tell us what the rocks are made of, versus methods to look for ice buried at the pole, versus better maps of the moon.)
I hope that cleared things up,
-- Rebecca Harbison