Although I suspect it'll just let players create a stock weapon, there are ways it could be more powerful which wouldn't be horrendously hard to implement.
Most simply, you could choose the colour and patterning of the weapon. That would simply be a matter of selecting a texture for it and (I think, but stand prepared to be corrected
) a shader that is applied.
More complexity would allow you to build the weapon from component parts. So, if you were creating a longsword, you could choose from 3 different pommels, 3 different hilts, and 3 different blades. Then choose one of 3 or 4 patterns for each. The game would take a basic template for the blade (a sort of invisible skeleton) and create a new instance of that, with the right visible parts attached. I think in GECK/Nif terminology the component parts would be AddOnNodes, and the game would adjust the index for the node to point to the chosen visible part.
The differences would only be cosmetic, but at least your new sword, knife, club or whatever would look like yours
.
[edit]
Heh, ninja'd a bunch of times. But I waffled more
.