The building:flats key[1] is documented on the wiki as "number of
residential units (flats, apartments) in an apartment building, residential
building, house, detached house or similar building".

It's a useful tag indicating the density of the building when combined with
geometry and height (or building:levels).

What's the process to change the Status from "In use" to "Approved"?

The status of the tag was raised in a request to get the tag into a
StreetComplete quest[2].

[1] https://wiki.openstreetmap.org/wiki/Key:building:flats
[2]
https://github.com/westnordost/StreetComplete/issues/1152#event-1771268946
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