It is damage. It had a broken birf at some point, was driven on (even getting off the trail will make a knuckle look like that) and then they cleaned it up a bit when they replaced the birf. Very common site and as nasty as that one is I've seen far worse, some with damage trunnion bearing race journals even.
As for the seal being in backwards, installer error. I can't think of a purposeful reason to do it. Sometimes that outer seal surface gets pretty hammered from pieces of a broken birf.