Production
More Flash is being written than ever before - by poets (realising that they already write some Flash), by story writers (who can't find markets for their usual pieces) and by an increasing number of specialists.
Distribution
Literary magazines are increasingly willing to print Flash, and the number of specialist magazines is increasing. The market's big enough to support genre outlets like Flashback Fiction. Short story books often include Flash nowadays, and some authors produce books of Flash.
Consumption
My impression is that both poetry and prose readers are more receptive to Flash nowadays. If a poetry reader says they like Armitage's "Seeing Stars" or a prose reader likes Borges they can hardly turn their noses up at Flash.
Bottlenecks?
What are the limits to growth of this chain? Are there too few respected outlets? Is the market saturated? Firstly it's worth pointing out that many Flash readers are writers, so it's more of a loop than a chain. Limiting the number of writers will limit the number of readers. Also, Flash grew when the web was already mature, so Flash readers are used to the idea of the best work not necessarily being on paper, so the cost of producing paper magazines isn't a constraint.
An experiment
During August, Spelk has printed a piece of Flash daily, at least doubling its output. I don't think quality has been diluted, and judging by the Comments and Likes, the market is far from being saturated. So perhaps the bottleneck is distribution. Maybe there's space for more Flash magazines, even though Everyday Fiction already prints stories daily, and many other magazines already exist.