That's dressing the hammer. Even forging hammers seem to have that sharp transition. Apparently smiths don't like it as it will leave sharp creases. A newb like me who has yet learned to strike with the face flat every time can ding up his work pretty bad with that sharp edge!
Another thing I do is take a steel woodworkers scraper and scrap all that varnish off down to bare wood. I don't like the looks or feel of the varnished handle. I darken the bare wood with a torch, sand it lightly and rub down with boiled linseed oil.
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