Check out the VW Tech Service Bulletin on the Ignition Immobilizer.
http://tech.vw.com
It's for the Jetta/Golf, but the immobilizer unit should be the same in all of the cars. Good info there, check it out.
I don't know why it would have been flashing. It might not have been getting a signal from the key for some reason, this would cause it to flash. Do you have other switchblade keys on your keyring? I have the key to my dad's Audi on my keyring but haven't had any problems with my immobilizer yet.
The TSB says that multiple keys can sometimes confuse the immobilizer and cause the car not to start.
I would guess that the most likely cause of your light flashing is that the immobilizer unit was not receiving a signal from your key, possibly due to another key on your ring, RF interference from radio towers and the like, or some other weird phenomenon.
I wouldn't worry about it unless it happens again.
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Über-Käfer: UPsoluted 2000 Yellow New Beetle 1.9 TDI 5-speed
1987 Diamond Blue Mercedes-Benz 190D 2.5 Turbo (sold, but considering re-purchase)