Probably it was milled, but that's nothing wrong with it. Was just a way to evidence that the gun was on "safe". Absolutely the same thing can be found on all 1900 and on 1900/06 Lugers. It was marked GERMANY like many others that were supposed to be sent to other countries.
Those guns were made for the Swiss commercial market. I've read that many were dispatched to Switzerland without barrels. Barrels of different production and lenght were installed. Probably made after Versailles Treaty.

I'm interested in adding this beauty to my small collection.
Paul (PEB) has put it up for sale and I'm interested in any further comments.