It's not rocket science, you are correct. If you don't already know Geno Smith is not the guy........ I'd be more in favor of cutting Smith and bringing Flynn in to be the backup (not that I am suggesting that) over starting Smith.
if they agreed they would have kept Flynn, since he's already used his vested guarantee, and if something shook loose that they like better cut Flynn. The fact they cut Flynn means they don't think they need it or they are willing to take the risk.