Wouldn't that knife-edge be sort of irrelevant in terms of damaging the chain
No, the knife edge chain hook significantly reduces chain strength.
(from Practical-Sailor):
During our research, nearly every maker of industrial chain offered the same caution: Using a generic chain hook can reduce the link strength by 20 to 25 percent. The generic style of chain hook, familiar to most sailors, resembles an elongated fish hook. As we found in this test, some other hook types are potentially more harmful.
Crosby, one of the world’s biggest suppliers of attachments for the lifting industry, offers a typical warning for its A-338 Clevis Grab Hook, nearly identical in design to those sold at chandlers. “The use of A-338 Clevis Grab Hook will result in a 20-percent reduction in chain capacity.”
...
For our test, we used a slightly undersized 8-millimeter (5/16-inch) chain that was compatible with the hook sizes. We chose used chain because it is representative of what is in use on many boats.
There was no doubt that the chain hooks reduced the chain’s strength. The original chain—without the hook—was tested and failed between the anchoring points; it broke at 6,274 pounds. With the Peerless hook, the chain failed at 4,849 pounds of load, representing a 22-percent reduction in strength, close to the lifting industry prediction of 20 to 25 percent. With the Mantus hook, the chain failed at 3,606 pounds of load, representing a 42-percent reduction in rode strength. Both chains failed at the hook.
The entire testing report is available at
Practical-Sailor (with a subscription).