1. unzip the file

┌──(kali㉿kali)-[~/code]
└─$ gunzip -d dds2-alpine.flag.img.gz
                                         

2. use `mmls` to see the structure first

┌──(kali㉿kali)-[~/code]
└─$ mmls dds2-alpine.flag.img
DOS Partition Table
Offset Sector: 0
Units are in 512-byte sectors

      Slot      Start        End          Length       Description
000:  Meta      0000000000   0000000000   0000000001   Primary Table (#0)
001:  -------   0000000000   0000002047   0000002048   Unallocated
002:  000:000   0000002048   0000262143   0000260096   Linux (0x83)
                                                    

3. use `fls` to list file and directory names in a disk image.
(usage: `fls [-adDFlhpruvV] [-f fstype] [-i imgtype] [-b dev_sector_size] [-m dir/] [-o imgoffset] [-z ZONE] [-s seconds] image [images] [inode]
If [inode] is not given, the root directory is used`)

┌──(kali㉿kali)-[~/code]
└─$ fls -o 2048 dds2-alpine.flag.img
d/d 26417:      home
d/d 11: lost+found
r/r 12: .dockerenv
d/d 20321:      bin
d/d 4065:       boot
d/d 6097:       dev
d/d 2033:       etc
d/d 8129:       lib
d/d 14225:      media
d/d 16257:      mnt
d/d 18289:      opt
d/d 16258:      proc
d/d 18290:      root
d/d 16259:      run
d/d 18292:      sbin
d/d 12222:      srv
d/d 16260:      sys
d/d 18369:      tmp
d/d 12223:      usr
d/d 14229:      var
V/V 32513:      $OrphanFiles

3. Since `root` is somewhat suspicious, set `inode` to `18290` to examine what's going on inside

┌──(kali㉿kali)-[~/code]
└─$ fls -o 2048 dds2-alpine.flag.img 18290
r/r 18291:      down-at-the-bottom.txt                           

4. then use `icat` to output the contents of a file based on its inode number.

┌──(kali㉿kali)-[~/code]
└─$ icat -o 2048 dds2-alpine.flag.img 18291
   _     _     _     _     _     _     _     _     _     _     _     _     _  
  / \   / \   / \   / \   / \   / \   / \   / \   / \   / \   / \   / \   / \ 
 ( p ) ( i ) ( c ) ( o ) ( C ) ( T ) ( F ) ( { ) ( f ) ( 0 ) ( r ) ( 3 ) ( n )
  \_/   \_/   \_/   \_/   \_/   \_/   \_/   \_/   \_/   \_/   \_/   \_/   \_/ 
   _     _     _     _     _     _     _     _     _     _     _     _     _  
  / \   / \   / \   / \   / \   / \   / \   / \   / \   / \   / \   / \   / \ 
 ( s ) ( 1 ) ( c ) ( 4 ) ( t ) ( 0 ) ( r ) ( _ ) ( n ) ( 0 ) ( v ) ( 1 ) ( c )
  \_/   \_/   \_/   \_/   \_/   \_/   \_/   \_/   \_/   \_/   \_/   \_/   \_/ 
   _     _     _     _     _     _     _     _     _     _     _  
  / \   / \   / \   / \   / \   / \   / \   / \   / \   / \   / \ 
 ( 3 ) ( _ ) ( 0 ) ( b ) ( a ) ( 8 ) ( d ) ( 0 ) ( 2 ) ( d ) ( } )
  \_/   \_/   \_/   \_/   \_/   \_/   \_/   \_/   \_/   \_/   \_/ 
                                                  

5. use Python to remove the redudant letters in `down-at-the-bottom.txt `

instr="p ) ( i ) ( c ) ( o ) ( C ) ( T ) ( F ) ( { ) ( f ) ( 0 ) ( r ) ( 3 ) ( n s ) ( 1 ) ( c ) ( 4 ) ( t ) ( 0 ) ( r ) ( _ ) ( n ) ( 0 ( v ) ( 1 ) ( c 3 ) ( _ ) ( 0 ) ( b ) ( a ) ( 8 ) ( d ) ( 0 ) ( 2 ) ( d ) ( }"
outstr=""
for i in instr: 
    if i not in " ()": 
        outstr+=i
print(outstr)

output:

┌──(kali㉿kali)-[~]
└─$ /bin/python /home/kali/code/test.py
picoCTF{f0r3ns1c4t0r_n0v1c3_0ba8d02d}