whats the point of having different types of engagement tokens couldn't they just have one generic one? and why do I have to pick them up and put a different one down?

Isn't once a unit engaged it's engaged? It doesn't matter who's engagement token is down right?

Maybe I missed something and you only get a parting blow or flanking bonus if your factions tokens down.

It matters on Building attacks. The Cover is lost by the people inside the building if the engagement token shows their house on it. See Building Terrain information near the end of the instructions. But I agree, otherwise it really doesn't matter at all.

For now I believe the colors do not matter. But later (expansions) may/will have purpose for the color.

Flanks are performed on engaged units, doesn't matter what color the engagement token is.

Cheers : )