A speaker that has a "flat" response is a speaker that usually reproduces sounds accurately. A speaker that doesn't have a "flat" response is said to "color" (distort) the sound it reproduces. Some people actually prefer certain forms of "coloring" over the sound of an accurate "reference" type speaker. Home theater center channel speakers often sound best if the midrange frequencies are slightly louder, this will tend to improve the on screen dialogue; others prefer a loudspeaker with louder lower frequencies (boom box type). Even so it's generally better to have the loudspeakers response as linear (flat) as possible and if more base or midrange is desired you may add the distortion with an equalizer or the tone controls on the amplifier.

This graph below is what a perfectly flat loudspeaker response chart would look like; it has the same amplitude (loudness) across every frequency. If nothing extra is added or removed (coloring) the loudspeaker will accurately reproduce the original sound.; thus this is what most loudspeaker builders will aim for even though it's impossible to achieve.

With some knowledge and skill obtaining a response like the one below is about as good as it gets. A loudspeaker is considered linear (flat) if it stays within a range of about two dB's from highest to lowest. The frequencies outside of the blue lines have become too quiet and won't affect the overall sound of the loudspeaker so they are not considered within the loudspeakers frequency range.

Their are many variables that influence the amplitude / frequency response that a loudspeaker will produce; these variables include the choice of loudspeaker parts, type of enclosure, cabinet material, crossover network type, crossover slope, the materials / furniture in the room and the room's size and shape. To compensate for room acoustics an equalizer or the tone controls on the amplifier can be used to "color" the sound produced by the loudspeaker.