The blacksmith shop allows players to repair damaged items. As you use items, their condition degrades slowly. The more an item degrades the less effective it is and also the less it is worth. Repairing items costs 1/2 of 1% of the item's perfect-condition value for each 1% of damage that needs repaired. So to repair an item whose condition is at 50%, the repair cost will be 25% of the item's value.
Items can be repaired while equipped as long as you have enough points to equip it, or you can repair unequipped items. Items cannot be partially repaired. Weaves and Ter'angreal do not degrade, so they will not appear in the repair list at the blacksmith's shop.