Server-side traces (sp_create_trace) and traceflags (DBCC traceon) are completely different concepts.
Server-side traces are essentially profiler traces without the GUI, they log when events occur on the instance being traced, such as login failures, stored procedure executions, errors, etc. You can use the profiler GUI to generate the script to create the trace for you.
Traceflags can be enabled or disabled (there are lots and lots of different traceflags) and they change certain aspects of SQL's behaviour.
For server-side traces, try a google search. Lots of information turns up with a simple search.
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