I too just unlocked it and was baffled. So first you have to put oil in it. Then equip a weapon you want repairing in your hand , then unequip it but the way where you put it on your back or its on your hips like daggers. Then activate the Grind stone, you should see it deplete by 1 oil and the item should be repaired but now its max durability has gone down 10-15 points. I’m on Xbox Series X by the way and thats how it worked for me. Dunno bout PC