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A serrated blade has a cutting edge. By having less contact area than a smooth blade, the applied pressure at each point of contact is relatively greater and the points of contact are at a sharper angle to the material being cut. This causes a cutting action that involves many small splits in the surface of the material being cut, which cumulatively serve to cut the material along the line of the blade.
Cuts made with a serrated blade are typically less smooth and precise than cuts made with a smooth blade. Serrated blades can be more difficult to sharpen using a whetstone or rotary sharpener than a non-serrated, however, they can be easily sharpened with a diamond. Serrated blades tend to stay sharper longer than a similar straight edged blade. A serrated blade has a faster cut but a plain edge has a cleaner cut. Some prefer a serrated blade on a pocket knife.