It's best to go by their hours. But they are offering flexibility, so if you are in a different timezone you can request it. If possible accomodate them, because it's MUCH less hassle for the company if you use their local working hours.
The reason behind this is usually in terms of contact/response times. I work with people from the USA and Australia, both of which are several hours out of whack with my local time (USA several hours + a 1 day difference). For convenience I work strange hours to accommodate them. I have another client who has three tiers of support, Singapore, myself and Japan. I can't contact Singapore until the late afternoon my time, Japan I never get a reply until mid evening. So it's a juggling act and the company needs to keep track of who is available and when.
Depending on what your job is it also might mean technical changes need to be done at different times from normal. So if I need to do some work on a database or server located in another country and I need everyone off it, I have to time it after their working hours, not mine.