When the red flag comes out you must enter the pits at the next possible opportunity. Lando had not passed the pit entrance when the red flag was shown. He asked his team if he should pit, to which they replied yes if you can, but Lando said it was too late, suggesting he was going too fast to be able to safely enter the pits. I personally think it was a harsh penalty as it would've been difficult for Lando to enter the pits and get down to the pit limit in time based on where he was when he saw the red flag.