I just logged into the game and my alliance flag is looking so choppy and bad. Yesterday it was completely fine but something has just changed over night, even when I post the symbol art into the chat it looks horrible? Why has the resolution of it been lowered?

Will it fix itself or will I have to redo my alliance flag?

Did you try relaunching the game? I noticed that sometimes SAs will bug and look discolored or broken for that session. Idk what causes this, but restarting PSO2 would fix it for me.