Day-Old Legend

So you've got Item Crafting. And you've got Flavor Text. And then you mix them together, and you get Blatant Lies.

Supposedly you first create so-and-so item, let's call it a Fire Sword, five minutes ago. Flavor text will tell of how the sword was used in an ancient battle between wizards 500 years ago. "Five hundred years ago? I made the thing TODAY!?"

There are some possibilities here. Perhaps the item was made, then became Excalibur in the Rust; but Rusty Excalibur had its own name and legend. Maybe you've merely rediscovered an old formula. Maybe you're not actually crafting a new weapon, but using some sort of Summon Magic to call the item from wherever it's resting. Maybe it'll go back in time after you're done with it and have been used then. Maybe in this universe items can be reincarnated?

...Maybe we're overthinking it? Justified, somewhat, in that eBay users tend to do the same thing, fluffing their sold items with an Informed Ability or two. Perhaps this is just a way to "add value" to a newly made item.

Examples of Day-Old Legend include:

Video game examples

The Star Ocean games do this a lot. It's possible you're just recreating the item for whatever planet you're on; and the flavor text is aimed at us, the audience; but still.
- Infinite Undiscovery is also guilty of this. Upgraded weapons will have different backstories.
Recettear: The fire bracelet I made caused the centuries-old desert? Really?
- As far as the customer is concerned, yes.
NieR can be guilty of this: Take your weapons to be upgraded and you get some backstories claiming that the weapon once caused an ancient tragedy.
A recurring feature of the Might and Magic games is the presence of ores of various qualities which can be brought to craftsmen and used to make equipment. With the best ores, you have a chance of making equipment which is not merely ancient, but unique and legendary. In the sixth game, one of the enchantments which can appear on equipment is the "antique" modifier which multiplies the item's value by ten. By using the Enchant Item on unenchanted items, you may randomly turn them into antiques.
Kingdom of Loathing has the Legendary and Ultimate Legendary Weapons of each class; with four each; even if one is an upgrade of another. It spoofs this in having the Accordian Thief's Ultimate Quest Weapon have a legend about something that hasn't happened yet. "It's even whispered that Shelia the Creeper used it to assassinate the villainous Pope Flaunchett VIII, though it'll be a while before that can be confirmed, since the current Pope of the Kingdom of Loathing is Flaunchett VI."
- The pixel whip subverts it: "This legendary vampire-slaying whip has been in your family for generations. No, wait, I'm thinking of a different whip. This one was made out of brown pixels by a crazy guy in a shed in the woods."
- And smashed apart with the description of the Avatar of Boris weapon, Trusty, a remarkably well-written treatise which posits that most weapons of legend started out being grabbed from some nameless enemy's hand in a moment of desperation, and eventually become legendary because people think they're legendary.
In Dragon Age II, killing a nameless high dragon will let you loot her Fire Gland, which, in turn, can be crafted by a local enchanter into an amulet named Urzara's Tooth. This unlocks a Codex entry, which claims that Urzara's Tooth is a 200-year-old relic of a dragon-worshiping cult.
Averted in Neverwinter Nights, where a weapon or piece of armor made by in-game will have the flavor text describe it being made by the specific blacksmith, in the current year and for the current campaign but in the same style as the "ancient" equipment so it feels like the player is crafting their legend for future adventurers as they play the game.
Averted in Drakengard (where, in both games, weapons reveal their histories as they increase in level) in two ways: one, you don't craft weapons, but instead unlock them, so you're not just making ancient weapons from scratch; and two, the starting weapons of your characters in the second game... have the backstories of their wielders as their histories.

Other examples

An interesting case appears in the Buffy the Vampire Slayer Fanfic I Am What I Am. According to a godlike future version of Willow (who should know), once they are forged magical weapons essentially transcend time and always exist and always have existed. They cannot be uncreated, not even by Time Travel.