Railroad spike knives are actually kind of like how they sound. They are knives made from steel railroad spikes that have been shaped and ground to form blades of various types.
There are a few benefits to these types of knives, one of which is that the actual spikes can be found all over the world, and are cheap. That means an affordable source of steel for making the blades.
The spikes also tend to be a good size for a knife from the get go. That is simply due to the design and length of railroad spikes. You will often see handles with a twist in them. This has a couple benefits, one being that it creates a more grippable handle. It also adds some design flair!
The steel found in these types of knives isn't the best steel that knife makers can use, but it is certainly sufficient for many types of knives such as hunting and throwing knives.
The above picture is actually a letter opener made from a railroad spike. It was created by C. Thomas of who has a store on JustCustomKnives.com called "The Knife".