Blink means "to close and open your eyes quickly" maybe because of the sunshine. For example: The direct sunshine made him blink several times.
Wink means "to close and open one eye quickly, usually to communicate a secret message". For example: My brother winked at me to tell me it was time to go.
Flash means "to shine suddenly and usually continuously" as in "I don't know why but that light was flashing".
And twinkle is usually used for stars. It means "to shine in the dark".
For the example you provided (Does an LED usually blink or flash?), as far as I know, all of them (blink, wink and flash) are right. But I'd go for "flash". And for cars, it's common to use "flash".