What functor does Grassmannian represent? As we know, the projective space $\mathbb{P}^n$ represents the functor sending $X$ to the set of line bundles $L$ on $X$ together with a surjection from the trivial vector bundle to $L$.
My question is, what functor does the Grassmannian $Gr(d,n)$ represent? Sending $X$ to the set of rank-$n$ vector bundles together with a sub-bundle of rank $d$?
More generally, what functors do flag varieties represent?
 A: Let me elaborate on some of the other answers. 
On the Grassmannian X = Gr(k,n) (I am using this notation to mean k-dimensional subspaces of an n-dimensional vector space), we have the trivial bundle $X \times K^n$ (here K is our field of definition), and the tautological subbundle R (naively, this is the subset {$(x,v) \in X \times K^n \mid v \in x$} which is a locally free sheaf of rank k, and its quotient Q is also a locally free sheaf of rank n-k. So we write
$0 \to R \to X \times K^n \to Q \to 0$,
which is the tautological sequence. Given a map to $f \colon Y \to X$, where Y is a k-scheme, we can pull back this sequence to get 
$0 \to f^*R \to Y \times K^n \to f^*Q \to 0$.
Conversely, given such a sequence, there is a unique map to X which gives this pullback. Naively, over a point y, the fiber of $f^*R$ is a subspace of $K^n$, so we send it to that closed point. So X represents the functor which sends Y to the set of short exact sequences as above. The quotient being locally free implies that the subsheaf is also locally free, so it really represents the functor which sends Y to the set of quotients $\mathcal{O}_Y^n \to F \to 0$ where the rank of F is n-k.
For general flag varieties, we have similar tautological sequences (but there are more subbundles to consider). This kind of analysis also makes sense for symplectic and orthogonal Grassmannians and flag varieties.
We can also do something similar if we're talking about the Grassmannian of a vector bundle instead of a vector space. Then we just work in the category of S-schemes instead of k-schemes where S is whatever the base space is.
A: Your description is almost correct. See Nitsure's notes: http://arxiv.org/PS_cache/math/pdf/0504/0504590v1.pdf , you can find it under "elementary examples". These notes are also included in the book "Fundamental Algebraic Geometry: Grothendieck's FGA Explained" which is really great.
Edit: As for the flag varieties, they parametrise flags of quotients:
$$\oplus^n \mathcal{O} \to V_1 \to V_2 \to \cdots \to V_k$$
with prescribed ranks of the bundles $V_i$.
A: Hi Yuhao,
It's better to think of projective $n$-space as representing the functor which sends $X$ to the set of rank $1$ sub-vector bundles of the trivial rank $n+1$ vector bundle over $X$ [such that the quotient is a rank $n$ vector bundle], mod isomorphism.
The Grassmannian $G(r,n)$ represents the functor which sends $X$ to the set of rank $r$ sub-vector bundles of the trivial rank $n$ vector bundle over $X$ [such that the quotient is a rank $n-r$ vector bundle], mod isomorphism.
The flag variety $F(r_1, \dots, r_k, n)$ represents the functor which sends $X$ to the set of tuples $(\mathcal{F}_1, \dots, \mathcal{F}_k)$ such that $\mathcal{F}_1 \subset \cdots \subset \mathcal{F}_k \subset \mathcal{O}_X^{n}$ and such that each $\mathcal{F}_i$ is a vector bundle of rank $r_i$ [and such that each of the corresponding quotients are vector bundles of the appropriate rank], mod isomorphism.
You can generalize further. Fix a scheme $S$ and a vector bundle $\mathcal{E}$ over $S$. Then in the above, with each $X$ being an $S$-scheme, replace the trivial bundles with the pullback of $\mathcal{E}$.
