Board Thread:Legitimate Canon Questions/@comment-75.74.2.204-20150713221049/@comment-4091815-20150724034821

The flies are a part of the nogitsune spirit that it can use to control and manipulate individuals.

They come from within the host body. We see this with nogitsune Stiles in the basement of Eichen House with Noshiko. The flies then enter the bodies of Derek, the twins and Issac and they create distractions by fighting.