As Tgg161 says, it's to maintain monotonic ordering of the notes. Because everything in western music theory is based off the C-major scale (including the grand staff), any scale that uses notes not in C-major has a key signature that indicates modifications to the default scale.

If you're trying to express the C-phrygian mode (Ab major) as a key signature, you can't have both a C and a C#, because you'd be modifying one line on the grand staff in two ways (in one, there would be no change - C - and in the other, you'd be sharping the line - C#). So instead, you flat the D, expressing the same note but in a way that preserves the representation of the C.

As for how I could tell it's C-phrygian, niftycake said that it was a doom metal riff which generally are in minor modes, so that threw out Ab major (where he'd have been playing iii-IV-iii-ii, another cool progression that has an unresolved feel) and i-II-i-vii was the best fit.

Not sure I described that well, let me know and I can try again. :]