We describe a natural geometric relationship between matroids and underlying flag matroids by relating the geometry of the greedy algorithm to monotone path polytopes. This perspective allows us to generalize the construction of underlying flag matroids to polymatroids. We show that the polytopes associated to underlying flag polymatroid are simple by proving that they are normally equivalent to certain nestohedra. We use this to show that polymatroids realized by subspace arrangements give rise to smooth toric varieties in flag varieties and we interpret our construction in terms of toric quotients. We give various examples that illustrate the rich combinatorial structure of flag polymatroids. Finally, we study general monotone paths on polymatroid polytopes, that relate to the enumeration of certain Young tableaux.