A Master Smith has a path-boost when forging magic items, equal to its point value. Most units have only one point of this trait, but additional sources to it stack; the Forge of the Ancients Global Enchantment gives all of the caster's friends one point, for example.

Confusingly, the Master Smiths of Middle Ulm aren't real Master Smiths; they have a Forge Bonus instead, which deducts from the cost of items by the listed amount, to a minimum of 1 gem in each required type.

The difference between someone with a Forge Bonus and a proper Master Smith is like the difference between a Technician and a Performer; the Technician is efficient, while the Performer is creative. The Dwarven Smiths of Vanheim think more about what they can make than how much it will cost them, while Ulm's "Master Smiths" have been taught to produce Blacksteel with whatever they have. That being said, some characters have both traits, such as the Titan of the Forge.