Eddie Vedder admits that he changes the lyrics and meaning of the song when he performs it, but he wrote the song with one story in mind, which he told at a concert in Newark, New Jersey on August 7, 2008. He asked if anyone had any questions, and a fellow asked what the lyrics to "Yellow Ledbetter" were. Instead of going word for word, Eddie simply told the story of the song.
The song was written during the first gulf war, when "Papa Bush" was President, as Eddie calls him. The story is about a young Grunger kid, all dressed up in his flannels with the long greasy hair. His brother goes off to fight in the war and gets killed. He gets a letter that comes in one of those yellow army envelopes and learns of his brother's death. So, all upset, he decides to go out and walk it off. On his walk he passes by a neat, middle-aged or elderly couple sitting on their front porch having some tea, and he sees that they have an American flag out. He gives a wave, because he feels like he relates: "The flag, my brother, you know..." But they don't know, of course. They don't know what's underneath the grunge and the long hair. All they see are the outward appearances, and they don't wave back.
The song has changed its meaning over time and Eddie changes the words to suit whatever is on his mind.