pkg-config is software development tool that queries information about libraries from a local, file-based database for the purpose of building a codebase that depends on them.
The tool is invoked via its command line interface (CLI), and it reports library information via standard output.
Other information, such as command-line options (flags), is more useful to build tools such as a compiler and a linker.
This file should be stored as part of the installation process as handled by RPM, deb, or other packaging system or by compiling from source code.
The Cflags entry defines an option that the C preprocessor uses to locate the library's header files – in /usr/local/include/libpng12.