Use 'feel flattered' when you're genuinely touched or feel recognized for your qualities or achievements. She felt flattered when her artwork was exhibited.
Pro Tip 2/3
Modest Response
Saying 'I'm flattered' is a polite and modest way to respond to a compliment. I'm flattered you think I'm the best cook you know.
Pro Tip 3/3
Unexpected Compliment
'Feel flattered' often implies the praise was surprising or not expected. He was flattered by the unexpected applause from his coworkers.