Recall how we derived all our equations:
Take an interval $[a,b]$ and consider $$\dfrac{\mathrm d}{\mathrm dt}\int_a^b(\text{quantity) d}x=\big[\text{Flux}\big]_a-\big[{\rm Flux}\big]_b.$$ For our example $$\dfrac{\partial u}{\partial t}+u\dfrac{\partial u}{\partial x}=0,$$ we can write it as $$\dfrac{\partial u}{\partial t}+\dfrac{\partial}{\partial x}\left(\tfrac12u^2\right)=0.$$ $$\text{i.e.}\qquad\dfrac{\partial u}{\partial t}+\dfrac{\partial \phi}{\partial x}=0\qquad\text{where }\quad\phi=\tfrac12u^2.$$

I don't understand why $\phi=\frac{1}{2}u^2$ is the flux in this case?
This is the inviscid Burgers' equation.
The reason that the flux is nonlinear, in this case it is $\dfrac{u^2}{2}$, is that we assume the convection velocity is linearly proportional to the density $u$ in the mass conservation equation in the 1D Euler's equation: $$ \frac{\partial u}{\partial t} + \frac{\partial }{\partial x} \boldsymbol{F}(u) = 0. $$ Here the flux function $\boldsymbol{F}(u) = \boldsymbol{v}\, u$, where $\boldsymbol{v}$ is the convective velocity (it should be a vector but in 1D it is just a number). If $ \boldsymbol{v}$ is proportion to the density $u$ itself, then you will get a square flux.
You can google any lectures on nonlinear conservation law to get a more detailed explanation.