Phineas decides to wear the pink shirt as "an emblem". He says vaguely that he heard that the Allies "bombed Central Europe for the first time the other day", so he feels he must "do something to celebrate". Since the boys do not have a flag they can "float...proudly out the window", he decides to wear the pink shirt as his own personal statement of celebration instead.
Phineas's flouting of the pink shirt and his outlandish explanation for doing so symbolizes two things. First of all, it represents his amazing propensity for thinking and acting completely outrageously, and getting away with it. Gene notes with amazement that "no one else in the school could have...(worn the shirt) without some risk of having it torn from his back". Not only does Finny manage to escape the censure of his peers for his attire, but he also avoids punishment at the hands of Mr. Patch-Withers, who, uncharacteristically, can only laugh upon listening to his student's convoluted reasoning. The pink shirt also symbolizes the "separate peace" enjoyed by the students in the summer session at Devon; there is a war going on, but they are far removed from it. Their perception of the war at this time, like the incongruous pink shirt, is wildly detached from reality (Chapter 2).