Thanks MPar and ILENGINE, for the replies. At least I understand what it is now. It's been so dry this year there has been areas with exposed sand. I mow an acre and the blades did 2 full seasons and been sharpened twice.
I was just a bit bewildered having never seen anything like that. I have seen blades become so wore the edges curve etc, but never paper thin areas dis-integrating at edges like this. The replacement blades I bought do not have such thin mulch flares so maybe they will hold up better.
By the way, [Edit] I now see the Edit down below so I can take out the line returns I left in my original post. I missed that on the original.