The Flotilla never really formed, at one stage a group of people realised that they just belonged together with their boats. Over time they were joined by more and more people, until they had a small fleet of ships. Coming to a decision, they agreed that they would become independent of the Kingdoms.
As they acquired more and more people, they gained more and more ships. Once they reached a certain point, they suddenly found themselves in a tight spot. So far they had relied on trading for their goods and repairs, and it was starting to take a toll on both the inhabitants and boats. Coming closer to a sudden end, drastic measures were about to take place. Their saving grace was an abandoned Schnee company freighter that had fallen under an attack by terrorists. Claiming it as their own, they formed a huge farm across it. Now with both a constant supply of meat from fishing and vegetables from the farm, they flourished. They expanded dramatically, building their skills and training their people. Suddenly they became a moving collection of workers that had an in depth knowledge of ships and their workings.
With a stable economy being built, they focused purely on their society. Team work and trust were vital to them, and the younger generations were taught valuable lessons to keep the Flotilla on the water. Being completely self sufficient, many traded their skills with passing vessels for parts money or even knowledge. They were gaining respect as a hub for any ship passing through. They had a fantastic foundation for their people.
The Flotilla was attacked. No one knew who did it, nor could they find out. With no defence force of any kind, they took serious damage and lose many lives. They repelled the attackers, having more than enough weapons because of the fishing boats. The leadership realised without any form of military of militia, they would be very vulnerable to further attack. They went to Vale, seeking support. Making a deal, they gained the expertise they very much needed. Training people as fighters, for defence work, part of the condition was that all who were trained had a chance to seek employment or further training within Vale. Most did not leave, having spent much of their life on one of the boats. However, the link to Beacon sometimes caught the attention of the younger members. With a path to the rest of the world, some took this opportunity to see the world. The Flotilla was once more a safe haven. It was changed, but life carried on as they wanted.
Being made of a variety of different boats and ships, not only is the Flotilla a constantly shifting maze but a logistical nightmare. Most of the core necessities are held by the larger ships, such as farming and water storage, but otherwise it follows the theme of "if it fits". That said, one particular cruise liner is home not to the inhabitants, but is instead their primary hub of trading. From everyday supplies for the people to spare parts for anyone that needs them. If it's on the Flotilla, it could probably be found there.
But moving these supplies is the tricky part. And so a rather reliable method was made. Fashioning a number of ship to ship clamps, when moving any kind of cargo in a substantial number, they both protect the ships and the cargo while transferring between them. Every ship in the Flotilla has these clamps and most are compatible with every other ship, bar a few exceptions.
While there isn't strictly a leader for the Flotilla, there is a group of between twenty to thirty people that represent various ships within the fleet that make the decisions based on consensus. These members usually don't change often, however after a time, the number nearly tripled and they instead rotated people through. But aside from administrative work, they aren't much more than representatives for their portion of the Flotilla. As such, it is the Flotilla has a whole that decides what to do.
When it comes to the command of the Flotilla as a fleet, this power is given to the Captains of the three largest ships, including the former Schnee freighter which is referred to by most as the 'Home' ship. These Captains have absolute authority when it comes to the movement and formation of the fleet. Their word is law and to be followed immediately. That said, they are still subject to the wishes of the community as a whole and can be overruled or even dismissed if called for. This however, has rarely happened.
All are welcome on these boats, with everyone getting along with their neighbours. Faunus and human alike live side by side without any problems. Once the leadership was formed, all problems were sorted within a day of occurring. The rules were simply, get along, or be separated. And everyone was happy with this. Once people found their spot, very few problems arose. To those that lived here, it was a paradise on water.