[Grandpa Kim]

what controls the number of neutrals present in a game?

As are many parameters, these numbers can be found in settings.txt in the data folder. In this case low is 1 to 3 neutrals, medium is 3 to 7, high is 6 to 10.

I also notice that the neutral races seem to have flags that are simple - of a single color. Is
this a good assumption to help identify them?

Yes! A one to one correlation here.

Kim