The way the item currently works is:
"On use: enter a buff activation mode. While in this mode, clicking an adjacent weapon gives ALL adjacent weapons a +125% damage buff and generates a curse. This does not end the buff activation mode. Click the Cursed Whetstone again to end the buff activation mode and return to normal backpack interaction."
If I had to guess, the whetstone is supposed to automatically select each adjacent weapon for the buff automatically, but something in the code is borked enough that it doesn't finish the "activate on X, end string" part of its sequence on its own, leaving it to the player to do those steps manually.