Many call it "Damascus" steel, after the city where it is reputed to have originated. Others, particularly in Europe, know it as "pattern welded" steel, which describes it quite well. It is steel produced by forging together steel laminates of different carbon contents. The resulting billet is then folded and/or twisted, often in a predetermined way, all the while being forged repeatedly. Because of the different carbon contents, the laminations show up as different colors and patterns are created in the steel.
Different steels perform differently, and by folding and forging them together a combination of their various performance characteristics can be achieved. For example, if one steel has the harness characteristics that we need but not the flexibility, and another has the right flexibility characteristics but doesn't meet our hardness requirements, by folding them together we can arrive at an optimum situation. It suits the requirements of many Chinese swords, with hardness, toughness and flexibility in one blade, very well. An added bonus, of course, is that some of the patterns we produce in the blades are quite beautiful.