LK is right about the leather boot lace wrap around the lock and side plate. You can see the discoloration and damage done already in the enlarged photo. Many a good old six gun was left in its leather holster for decades or longer and has had the finish heavily damaged. But, back to the question, it may be that the wood was damaged during manufacture or sometime later and this is how a gunsmith may have tried to do a repair. Many times the damaged wood was simply drilled out and a brass or lead bushing dropped in to improve the fit. It is well done in any case. Another possibility; it appears that the lock bolt was over tightened many times and not only broke the wood out, but also the top edge of the brass side plate. Someone removed the damaged brass, filed it level and put the wood bushing in. The pins in the side plate show some damage, too; probably from removal and replacement during the repair.
Dick