At the highest tiers, you will be able to make swords only kings would dream of wielding (a king that you could become!). At the lowest tiers, you will be making mediocre hatchets.
The higher your skill, the more options you will have. Smithing, in Bannerlord, is a skill in the Endurance row that allows you to forge and smelt weapons within the game. Guide to Smithing The Basics – What is Smithing? The Testing Grounds – XP gains, Random Testing Points.