A specialized instrument used to open oysters, it resembles a knife in that it has a handle for gripping and a tapered metal blade, but here the similarity ends.
Knives of the traditional sort can have any style handle but oyster knives usually have rather fat and rounded handles to aid in grasping. Generally the handle is of wood or plastic, the oyster knife being a very utilitarian instrument.
The blade portion is of medium length (4-6 inches), and is tapered to a blunt tip. The edges are also dull. So, you ask, why ever do they call this thing a knife? Good question, and my attempt at a good answer is because it looks like a knife. The appearance is manifestly deceiving. Whereas a knife is designed to cut, be it meat, bread, or vegetable, an oyster knife is created for the sole purpose of levering open an oyster's shell.
As with most things, there is a right way and a wrong way to go about this. First, you need an oyster, or better yet a dozen or two of the yummy little creatures. They don't come cleaned from the bay or estuary, so take them and scrub them with a brush under cold water to remove any silt or algae/barnacles which may be present.
Next, hold the oyster with a towel or mitt with the pointed (hinged) side out. This will keep you from making a painful and bloody mess when the knife slips. Unless you are practiced, count on the knife slipping. When it does you'll come to appreciate the dulled tip and edges.
With the oyster flat side up, insert the tip of the knife near the hinge. You only have to insert the knife about a half inch. Slide the knife around the lip from insertion point all the way around to the other side near the hinge, maintaining that same half inch depth with the tip at a slight elevation. Keep the oyster flat to keep from losing the liquid inside the shell, which is the liquor.
The oyster should open easily, but the knife can be used as a lever to help. Simply twist the handle either clockwise or vice versa to apply leverage, a technique called hinge popping. As the shell opens, use the knife to cut the abductor muscle away from the top portion of the shell, leaving the oyster lying on the bottom half shell. Remove any bits of shell or debris from the oyster. Do NOT wash, as this removes a significant amount of flavor, as well as the liquor which we have taken such care to preserve.
Now use the oyster knife to loosen the abductor muscle which attaches the oyster to the bottom half shell, being careful yet again to not spill the liquor.
If you've done everything properly, you now have 1 oyster and 10 fingers. The oyster can be removed for frying or stewing, or left on the half-shell and placed on a bed of crushed ice to chill. Once chilled they can become acquainted with an appropriate sauce and eaten raw.
The use of an oyster knife for the first time is an adventure. It brings an appreciation for the people, primarily ladies, who shuck oysters for a living. These oyster shuckers get paid by the quart (or other unit of measure), not by the hour. In other words, if they aren't highly efficient and quick, they don't earn very much money. When confronted by a dozen oysters, it is an exercise in patience. Whe faced by several bushels of them it is an invitation to audition for sainthood.
To think all this is made possible by the humble oyster knife. Without it, we'd either have to throw them high in the air and let them fall to the sidewalk to crack open or start flailing away with our trusty ball peen hammers. Now, everyone ready? Scrub, slip it in, slide it along, work it around. It's even more fun to do these things without an oyster, but that's another article.
Sources:
http://gourmetfood.about.com/od/cookingtechniques/ss/openoyster_6.htm