Object recognition requires you to see an insane amount of detail. You can reconstruct a lot, but you still have to see a lot before you can recognize an entire object.

That puts the threshold for basic perception much higher; you may not be able to see the details of the objects flashed at you for 1/500 of a second, but you can tell that something was flashed. If a bright light is strobing at 500Hz, you can tell it's strobing, not just on.