This little wooden wheel is used for smoothing and polishing the edges of belts and other strap work. It works best when you've taken off the sharpest corners of your strap with an edge tool and then applied some gum tragacanth to the edges.
You then take the wheel in one hand and your strap in the other, place the slot of the wheel over the edge of your strap and rub backwards and forwards to achieve a smooth edge.