What does the flashing green-light signal (return for landing) actually mean to NORDO aircraft?
What I was taught that this meant was ...

... because they could not communicate with you, but they wanted you to not land on this pass (interval a mess, crossing traffic, winds maybe wrong, a dozen other things that might crop up) it was more or less "the runway will be ready for you if you take another lap in the pattern." This also gives them a bit of time to get all of the other aircraft in the pattern out of the way of the aircraft in distress. (And the steady green ought to confirm that on the next pass, if all things go well).   

Tower operators would rather get that aircraft who can't talk to them onto the ground.  What they want to avoid in this case (again, this is what I was taught by a salty old Navy controller when I was in flight school) is that they wanted to avoid the aircraft attempting to land being "spooked" by a red light and thinking they can't land at this field.  And then waving off and flying off in search of another field while still NORDO.  

The green light is the 'friendly' light between choices of red and green. Put in the chief's colloquial jargon: "Flashing green lets the pilot know "the runway will be there for you when you come back for your next approach." 

The Canadian Aeronautical Information Manual, which has all of the signals to include the two that are relevant to this question, can be found here.  

The teaching that I got may no longer be current, but the lights shown to a NORDO airborne aircraft still mean the same thing as they did when I was taught.    


  Steady Green:  cleared to land
  Flashing Green: return to land (to be followed at the proper time by steady green)