to help the luger drip-dry.
actually sometimes a leather strap is run in that hole with a knot in the middle of the strap in the inside pouch of the holster. and the open ends of the strap hanging down below the holster can be tied around your thigh to keep the holster tight and in place on the side of your leg.
see this other holster for what i am trying to describe. this one has some sort of metal fixture or swivel through the hole in the leather and then the leg strap loops thru the metal.
http://www.liveauctioneers.com/item/8609400
or like this
http://www.cowansauctions.com/auctio...x?ItemId=77513
or like this
http://www.rubylane.com/item/435610-...Island-US-Army
or like this
http://www.coltautos.com/1907ci_holster.htm