This gets asked weekly.
I don't mind. It's a good question with a good answer.
Flamenco players sit the way they do primarily so that they can see the dancers to make sure they are perfectly in synch..
Generally flamenco is really more about dancers and singers than guitar, which usually takes on more of a supporting role. Keeping time and playing chords to harmonize.
There are solo flamenco guitarists however. And they are very good. Look at Paco De Lucia. But it's sort of a niche within a niche. Just like classical guitar!