Item damage has internally been represented with two values, item state and item permanent damage (or age). The permanent damage and item state will be shown to players like this:
State, from best to worst: Permanent damage/age, best to worst: flawless new well-maintained fresh satisfactory seasoned used well-seasoned worn aged neglected old marred hoary unavailing timeworn deteriorating age-old worn out antiquated
Now, this is important: Only the state decides how good the item is. The older an item is, the quicker its state will go down though. So - a (flawless, new) sword, is just as good as a (flawless, old) sword.
Items that are timeworn or older cannot be mended in any way, and have little value.
From News 2096 by Ilie.