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Definitely wear from damage, +/- an attempted refinish.
Was it advertised/purchased as a new gun? No way it would have left the factory looking like this.
Not knowing the process of cutting in the grooves, I would say it left the factory that way, and you are looking at the original rough casting before it would have the grooves cut, and the casting smoothed. I say this because of the roughness going all the way to the top on the extreme outside edges of the back strap. I assume the process is drop forging to form the frame. I have seen thousands of Ruger barrels and frames made made as well as the levers for Winchester and Marlin rifles. They are drop forged, thrown into wooden barrels, and then sent to the respective companies for finish. I doubt S&W does their own drop forging. I have been to the factory many times, and I certainly would have heard that noise. hammer forging will sink building footings. Usually there are telephone poles sunk 30 feet to bedrock under the forging machines, and the noise will make your head ring for hours
My thoughts when buying it for $350 was that if it bothered me too much I could re-cut the serrations or just throw on a set of Pachs or other grips that cover the backstrap. It doesn't appear to have had metal removed or any signs of damage. The rest of the gun is probably 95%; mechanically it's perfect, zero end shake, no shims found, no push off, screws are perfect, etc.
My guess is it was an attempt to polish out pitting and corrosion. Whole gun likely refinished. A holstered gun in rain and snow will rust on the back strap.
You're confusing castings with forgings and S&W does indeed do their own forging: Metal Forging - Smith & Wesson Precision Components
As for the piece in question, looks like a Bubba job someone, not the factory, did.