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A good question! If memory serves the answer is not clearly understood, but speculations include that it might be purely decorative, that it might in some way strengthen the blade against snapping, or that it might make unpleasant vibrations when struck, putting an enemy off-guard.

It's speculated that the serrations help the blade cut better by creating gaps between the blade and what it's cutting. It supposedly lowers the friction and enables a cleaner cut