"Damascus" in knives is a new-ish thing. I believe it was reintroduced in the 1970s or 1980s. However, it's not quite the same thing as the "Damascus steel" which was famous in the ancient world. Sources seem to disagree on whether this was really a product of Damascus or whether it was a metalworking technique that originated in Damascus and was then copied in Toledo and other metalworking centers of the Old World (Toledo being the old capital of Spain which was in close proximity to the Muslim world, where Damascus was a major city, etc.) Or perhaps it was a steel from India that came to the West via trade routes that terminated in Damascus. We don't know for sure.
Anyway, Damascus steel, whatever it was, was rendered superfluous by the new steelmaking processes developed in Western Europe after the Industrial Revolution, and forgotten. Certainly however, there was the steel which we would call "pattern welded," which looks exactly like modern "Damascus," and which was used until the end of the 19th century (and the adoption of higher pressure smokeless powder) for gun barrels. You particularly see it with beautiful old double barrel shotguns.
Today's Damascus may look like we suppose ancient Damascus steel looked like, but probably isn't the same thing. It does look neat though and in the right knife can be breathtaking. It derives its cutting efficacy from the serrated edge which develops when you have a hard steel mixed with a softer steel, or so I was told by a gentleman who makes the stuff.