The putty knife is used to apply putty to glass rebates. There are different forms that are said to be regional. The blade can be pointed or blunt, stiff or springy, straight or curved.
The house painter uses the putty knife, after priming the woodwork, to plug nail and screw holes with putty.
A rather rare model has small slots in the blade (1), just like a glass cutter, to break off small pieces of glass.
(1) See JACKSON & DAY: 170 and SALAMAN 1976: 251.