According to the wonderfully awesome Wikipedia, the following explanantion answers your question perfectly:
There are four red six-pointed stars on the center white stripe, from left to right (although this is not the order in which they were added to the flag).
The first star represents Fort Dearborn. It was added to the flag in 1939. Its six points symbolize transportation, labor, commerce, finance, populousness, and salubrity.
The second star stands for the Great Chicago Fire of 1871, and is original to the 1917 design of the flag. Its six points represent the virtues of religion, education, aesthetics, justice, beneficence, and civic pride.
The third star symbolizes the World's Columbian Exposition of 1893, and is original to the 1917 design. Its six points stand for political entities Chicago has belonged to and the flags that have flown over the area: France 1693, Great Britain 1763, Virginia 1778, the Northwest Territory 1798, Indiana Territory 1802, and Illinois 1818.
The fourth star represents the Century of Progress Exposition (1933–1934), and was added in 1933. Its points refer to bragging rights: the United States' 2nd Largest City (became 3rd largest in 1990 census when passed by Los Angeles), Chicago's Latin Motto (Urbs in horto – City in a garden), Chicago's "I Will" Motto, the Great Central Marketplace, Wonder City, and Convention City.
Source: http://en.wikipedia.org/wiki/Flag_of_Chicago
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