Yeah, it is merely a designation that helps AI know what to recruit. Certain factions are scripted to recruit certain units AFAIK. That "balanced caesar" or "builder stalin", etc AI personalities thing in desc_strat may influence AI recruitment.
EDIT: oh, you meant the weapons? Hmm, beats me. I do know vanilla blacksmith buildings would first upgrade the light weapons, and then heavy. In EB, there is only one level of a blacksmith.
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