Poland's flag is a plain white-over-red bicolor, and both stripes were lifted from a coat of arms that predates the country's modern borders by six centuries.
White eagle, red field
The white eagle on a red shield has been Poland's emblem since the 13th century. The flag takes those two heraldic colors and lays them out as stripes, white above and red below. White is usually read as peace and purity, red as valor and the fight for freedom, though the colors sat on the shield long before anyone attached those meanings to them. Similar combinations turned up on banners of the Polish-Lithuanian Commonwealth.
The current flag was adopted in 1919, the year after Poland regained independence at the end of the First World War, following more than a century of partition between Austria, Prussia, and Russia. Nothing about the design has changed since. What changed was the mood around it. Under the communist government the white and red carried an edge of dissent; after 1989 it could be flown without one. Because there is no emblem on the national flag, there was never anything for a new government to add or scrape off, which is one reason it came through the century intact.
Where you see it
The flag flies on government buildings and comes out in quantity for Constitution Day on May 3 and Independence Day on November 11. Protocol governs how and where it is hung. Polish supporters carry it at international sporting events, and it turns up throughout Polish literature and art, particularly in work about the partitions and the struggle for independence.
The version with the coat of arms on the white stripe is the one used abroad and at sea. The naval ensign carries the eagle.
Not Indonesia, not Monaco
Indonesia and Monaco both use red and white with red on top, the exact reverse of Poland. The proportions differ as well. Two horizontal stripes in two colors leaves very little room for variation, so the overlap says less than it looks like it does.
Related terminology
Vexillologists call a two-color design like this a bicolor, and a flag flown by naval forces an ensign. In Polish the flag is "Flaga Polski," and the white and red are the "barwy narodowe," the national colors.
References
[1] Polish Ministry of Culture and National Heritage
[2] Flags of the World Association (FOTW)[3] Gov.pl - Polish Government