It's for use on a straight razor which does not have hard tempered steel at its edge. You warm up the edge and draw out a kind of extended wire edge by stropping on the smooth leather side. That is why straight razors are extremely sharp but don't hold an edge worth a tinker's dam. Some of the harder tempered razors would hold an edge longer - if you are able to put one on it.
Don't use the canvas side on tempered steel knives. I don't know if you could warm it up enough to draw out the temper - maybe you could if you really stropped furiously.
A lot of rubbing compounds and stropping pastes stick to cold metal, but don't stick to warm metal (anything around 100 F is normally good, but room temp can be sticky).
This way if you warm up the blade a little, it doesn't get as much stropping paste sticking to it, and it strops more easily.
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