The actual term is "reeding". Reeds were first put on the edges of coins back in the days when coins contained precious metals such as gold or silver. It was a common practice for crooks to shave off a tiny amount of metal all the way around the rim of a lot of coins, collect the shavings, and sell them to a metal dealer. If they did the work carefully they could reduce the diameter of the coin very slightly, not enough to be noticed, but enough to accumulate a nice profit once they'd shaved a large enough number of coins. However, shaving a coin with a reeded edge would immediately be obvious and the police or mint officials would know that someone was committing fraud.

Low-denomination coins generally are made of inexpensive metals so they were never reeded, partly because the risk of shaving is quite low and reeding adds a bit to the cost of producing a coin.

When the U.S. and other countries eliminated silver and gold from their coins, the new issues were usually struck from the same dies so reeding continued to be used as a matter of tradition and backwards-compatibility. However, as new designs and denominations were introduced reeding came to be used as a way to make coins distinctive by feel as well as appearance. This gives mints more latitude in choosing sizes because coins can be told apart by their edges as well as their images and colors, something that's particularly important for people who are visually impaired.

New styles of edge markings have been used to replace or augment traditional reeding. For example, some coins have "interrupted" reeding, featuring alternating bands of smooth and reeded metal, while others have thick reeds that resemble worn-down gear teeth. EU 2¢ coins even have a groove running laterally around the edge, a bit like an Oreo cookie, rather than reeds oriented vertically with respect to the coin's faces.