The effect of a flat transom.

My dinghy has a flat transom. It's vertical, too. What does the water flow look like behind such a transom at a modest speed like 3 mph? Does water in any way follow the boat like the still air you try to create behind a windbreak for a cyclist? Hope my question makes sense.

 

If properly designed and the boat isn't overloaded / incorrectly loaded then the vertical transom should not touch the water, the underside of the hull should smoothly come up to the waters surface, stopping at or after the surface of the water..
If it is under water then yes the water will try to follow the hull and fill in the vacant space as you move forward. This causes drag and inefficient sailing..

 

You can simply look and see how the water flows. At some speed it will probably separate and the transom will be dry.